[Congressional Record (Bound Edition), Volume 149 (2003), Part 6]
[Senate]
[Pages 8375-8406]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. SNOWE:
  S. 774. A bill to amend the Internal Revenue Code of 1986 to allow 
the use of completed contract method of accounting in the case of 
certain long-term naval vessel construction contracts; to the Committee 
on Finance.
  Ms. SNOWE. Mr. President, I rise today to once again introduce 
legislation to simplify and restore fairness to the tax accounting 
rules under which our six major U.S. naval shipyards determine their 
tax liability on the naval ship contracts they are awarded by the Navy.
  Quite simply, this legislation would permit naval shipyards to use a 
method of accounting under which shipbuilders would pay income taxes 
upon delivery of a ship rather than during construction. Under current 
law, profits must be estimated during the construction phases of the 
shipbuilding process and taxes must be paid on those estimated profits, 
a process known as the ``Percent of Completion Method'' of accounting.
  The major shortcoming of this method is that shipbuilders must report 
progress payments as ``revenue'' rather than as a source of financing, 
which had been recognized and permitted for the 64 years between 1918 
and 1982. Additionally, it creates a ``legal fiction'' of an ``interim 
profit,'' when in reality a profit or loss is not reasonably known 
until after a ship is completed. This places a financial burden on 
shipbuilders during the critical construction phase; reduces the 
resources available to invest in facilities and processes to reduce 
construction costs; places a burden on the cash flow management of the 
shipbuilder; and weakens the financial health of the defense 
shipbuilding industrial base.
  The legislation being proposed would simply allow naval shipbuilders 
and their team members to use a modified ``Completed Contract Method'' 
of accounting, under which the shipbuilder would pay taxes when the 
ship is actually delivered to the Navy. In other words, the delivery of 
each ship would be treated as the completion of the contract for 
``Completed Contract'' purposes, regardless of how many ships are built 
under a contract.
  Prior to 1982, Federal law permitted shipbuilders to use this method 
but the law was changed due to abuses by Federal contractors in another 
sector, having absolutely nothing to do with shipbuilding. Moreover, 
non-government shipbuilding contracts are already allowed to use this 
method of accounting, and this legislation contains provisions designed 
to prevent the types of abuses witnessed in the past. Specifically, the 
bill would restrict shipyards from deferring tax payments for a period 
beyond the time it takes to build a single ship.
  This bill would not reduce the amount of taxes ultimately paid by the 
shipbuilder. It simply would defer payment until the profit is actually 
known upon delivery of the ship. I believe that this is the most fair 
and most sensible accounting method. It is the method that naval 
shipbuilders employed in the past. It is the method which commercial 
builders are permitted to use to this day. This legislation has the 
strong support of the major shipyards that build for the Navy. As such, 
I strongly urge my colleagues to join me in a strong show of support 
for this effort.
                                 ______
                                 

                           By Mrs. FEINSTEIN:

  S. 775. A bill to amend the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act to make private, nonprofit medical facilities 
that serve industry-specific clients eligible for hazard mitigation and 
disaster assistance; to the Committee on Environment and Public Works.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce a bill that

[[Page 8376]]

would allow private, non-profit medical facilities which service 
industry-specific clients to be eligible for hazard mitigation and 
disaster assistance. Under the current law, institutions such as these 
are limited in their ability to receive the Federal funds needed for 
both preparedness and response in the case of emergencies.
  In particular, I speak today of the Motion Picture & Television, 
MPTF, Hospital, located in the earthquake-prone San Fernando Valley. 
Set up more than 80 years ago to provide members of the entertainment 
industry with vital medical care and social services, the MPTF Hospital 
is the only institution of its kind in the United States.
  With an acute care hospital, six outpatient facilities staffed with 
primary care physicians, a children's center, retirement facilities, 
and programs for the elderly, the MPTF Hospital provides comprehensive 
care for a significant sector of the population of the greater Los 
Angeles community. It is the only non-profit institution providing 
industry-specific health and human services to the entertainment 
industry and to the general public.
  This legislation is important because in the aftermath of the 
Northridge Earthquake of 1994, considered one of the worst natural 
disasters in U.S. history, the MPTF Hospital was unable to receive 
federal assistance to repair structural and equipment damages suffered 
from the earthquake. Furthermore, that same year, the California Senate 
enacted legislation requiring all hospitals to be seismically 
retrofitted by 2010. The costs of both the reparations and structural 
upgrades are enormous, and the MPTF Hospital cannot receive federal 
funds because as an institution serving an industry-specific clientele, 
it does not qualify under the current definition of a ``private, 
nonprofit facility'' within the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act of 1988, Stafford Act.
  To address this problem, this legislation broadens that definition to 
include tax-exempt facilities that provide medical services to specific 
occupational or industry segments of the general public.
  Under this change, facilities such as the MPTF Hospital would have 
the opportunity to apply for federal assistance under the Stafford Act, 
alongside other private, nonprofit institutions.
  There is no up-front cost stemming from this amendment to the 
Stafford Act. This bill simply puts the MPTF Hospital on equal footing 
with other critical care facilities when applying for Federal disaster 
assistance.
  This legislation is timely and necessary. Hospitals such as the MPTF 
deserve an opportunity to apply for Federal funding, and desperately 
need this financial assistance in order to both meet California's 2010 
deadline for seismic retrofitting and respond adequately to future 
disasters. I call on this body to enact this legislation promptly.
                                 ______
                                 

                            By Mr. CAMPBELL:

  S. 776. A bill to amend chapters 83 and 84 of title 5, United States 
Code, to authorize payments to certain trusts under the Social Security 
Act, and for other purposes; to the Committee on Governmental Affairs.
  Mr. CAMPBELL. Mr. President, today I am introducing legislation that 
would amend Title V of the United States Code. It authorizes the Office 
of Personnel Management, OPM, to make payments to a disability trust or 
a pooled trust which is set up for a disabled dependent of a Federal 
worker in a way that would allow him or her to continue to receive 
Medicaid benefits.
  My bill would put disabled dependents of federal workers on a par 
with disabled dependents of those in the private sector. In 1993, 
Congress passed a statute allowing disabled persons to have trusts. 
And, in 1999, the Supplemental Security Income, SSI, statute was 
amended to conform with the basic Medicaid law. But, as current law is 
interpreted, these protective trusts cannot be set up for disabled 
dependents of federal workers in a way that allows them to keep their 
other benefits.
  This oversight can cause devastating and confusing circumstances for 
disabled dependents and their guardians. In Colorado, Lisa Neikirk, a 
Downs Syndrome child, became entitled to a small civil service 
retirement annuity from her father when he died in 1994. This benefit 
in the amount of $310 per month was just high enough to push her off 
SSI and Medicaid and she lost her benefits at that time.
  Because Congress had recently passed a Medicaid statute allowing 
disabled people to have trusts, Lisa's mother created a trust for her. 
However, the Social Security Administration took the position that OPM 
statutes do not permit Lisa's benefit to be assigned to a trust without 
negating her Medicaid benefits. The Social Security Administration 
accepts these trusts with other assets but the OPM statute preexisted 
the 1993 law and would not allow benefits to be assigned to these 
trusts without this change. Lisa's situation is only one of several 
such cases throughout the country.
  The bill I am introducing would grant to OPM the discretion to pay a 
retirement annuity to a disability trust which is set up for a person 
in a way which would allow them to continue to receive Medicaid 
benefits. This policy change has been very carefully drafted so that it 
cannot be abused. It stipulates a trust that is qualified under 
Medicaid law and adheres to two Medicaid statutes.
  I believe it is important that we better protect disabled children of 
Federal workers. We need to make it clear that disabled dependents of 
Federal workers are protected by laws that now protect people in the 
private sector. In today's uncertain world, I believe dependents of 
federal workers need all the protection that is available to them under 
the law. We must not let outdated federal statutes put federal workers 
and their dependents at a disadvantage.
  This legislation provides another step toward making our laws fair 
for the disabled in our country. I urge my colleagues to support its 
passage.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 776

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. AUTHORIZATION OF CERTAIN PAYMENTS UNDER THE CIVIL 
                   SERVICE RETIREMENT SYSTEM AND THE FEDERAL 
                   EMPLOYEES RETIREMENT SYSTEM TO CERTAIN TRUSTS 
                   UNDER THE SOCIAL SECURITY ACT.

       (a) Civil Service Retirement System.--
       (1) Payments.--Section 8345(e) of title 5, United States 
     Code, is amended in the first sentence by inserting before 
     the period ``, or is a trustee under a trust meeting the 
     requirements of subparagraph (A) or (C) of section 1917(d)(4) 
     of the Social Security Act (42 U.S.C. 1396p(d)(4) (A) or 
     (C))''.
       (2) Assignability of payments.--Section 8346(a) of title 5, 
     United States Code, is amended by striking ``except under'' 
     and inserting ``except to a trust meeting the requirements of 
     subparagraph (A) or (C) of section 1917(d)(4) of the Social 
     Security Act (42 U.S.C. 1396p(d)(4) (A) or (C)) or under''.
       (b) Federal Employees Retirement System.--
       (1) Payments.--Section 8466(c) of title 5, United States 
     Code, is amended in the first sentence by inserting before 
     the period ``, or is a trustee under a trust meeting the 
     requirements of subparagraph (A) or (C) of section 1917(d)(4) 
     of the Social Security Act (42 U.S.C. 1396p(d)(4) (A) or 
     (C))''.
       (2) Assignability of payments.--Section 8470(a) of title 5, 
     United States Code, is amended by striking ``except under'' 
     and inserting ``except to a trust meeting the requirements of 
     subparagraph (A) or (C) of section 1917(d)(4) of the Social 
     Security Act (42 U.S.C. 1396p(d)(4) (A) or (C)) or under''.
                                 ______
                                 
      By Mr. INHOFE (for himself and Mr. Baucus):
  S. 777. A bill to amend the impact aid program under the Elementary 
and Secondary Education Act of 1965 to improve the delivery of payments 
under the program to local educational agencies; to the Committee on 
Health, Education, Labor, and Pensions.
  Mr. INHOFE. Mr. President, I rise today to introduce a bill to make 
the Impact Aid Program a Federal entitlement.
  Impact Aid is one of the oldest Federal education programs, dating 
from the 1950's, and is meant to compensate a local school district for 
financial

[[Page 8377]]

losses resulting from Federal properties or lands in that district. 
Congress met its obligation of fully funding Impact Aid until the 
1970's. When the funding was cut in 1971, many districts that greatly 
depend on Impact Aid began to suffer. In the past few years, the Impact 
Aid payment formula has become increasingly complex, causing great 
funding disparities for the same types of students in different 
districts.
  I have consistently supported increased appropriations for Impact Aid 
because it not only provides an essential revenue source for impacted 
districts, but it is also a Federal obligation. Often, close to 90 
percent of a local school's funding is comprised of the local tax base. 
When the presence of the Federal Government in a community takes away 
from this tax base, we must compensate for this loss. When we do not 
fulfill our obligation by adequately funding Impact Aid, our children 
suffer the consequence such as lower test scores, lower attendance 
rates, crowded classrooms, and fewer and older facilities.
  Although funding for Impact Aid has increased over the past few 
years, it still remains under-funded. Today, I am taking the first step 
to correct this inequity. My bill will require Congress to meet its 
duty to these children and schools that have been under-funded for so 
long. I urge my colleagues to join me in fulfilling our obligation by 
permanently fully funding the Impact Aid program.
  Mr. BAUCUS. Mr. President, I rise today to join my friend and 
colleague Senator Inhofe in introducing a bill that will make a real 
difference in schools on or near military bases, Indian reservations, 
and other Federal lands. Our bill will make the Impact Aid Program a 
Federal entitlement.
  We require public schools to accept all children from military 
families and tribal reservations. It is the right thing to do. But 
families in Federal housing or on reservations do not pay local 
property taxes, a traditional revenue source for school districts. 
While Impact Aid was designed to make up the difference, we have not 
met our obligation to public schools. Instead, we have let the Impact 
Aid Program fall prey to the annual appropriations process. This means 
that payments to Impact Aid schools are never guaranteed, are usually 
underfunded, and rarely arrive on time. In fact, Impact Aid has not 
been fully funded since the early 1980s. The result of this 
underfunding can be seen in Impact Aid schools in States across the 
country. Schools are cutting programs and staff, not buying new books 
and materials, and deferring maintenance on buildings to help cover 
classroom costs. As a result, schools like Hays Lodge Pole School in 
Montana cannot teach their students and maintain their school facility; 
in the last couple of years, the Hays Lodge Pole School has been 
susceptible to electrical fires and other structural hazards.
  I am so proud of the students, teachers, and administrators that 
learn and work in our Impact Aid districts. They have gone above and 
beyond to make due with scant resources. In many cases, however, we 
have stretched school districts to the breaking point. We have an 
obligation to our schools and the students. We can and must do better 
than we have in the past.
  The bill that Senator Inhofe and I are introducing today will make a 
difference. It requires the Federal Government to meet its obligation 
to these schools. As a result, districts will know when and how much 
they will receive. The guesswork will vanish, and school leaders will 
be able to focus on student achievement instead of budget games.
  I recognize that creating a Federal entitlement program is not an 
easy task. But Impact Aid is not like other discretionary programs. It 
was set up to compensate school districts for the ``substantial and 
continuing financial burden resulting from Federal activities.'' It is 
not a program that supplements local programming. It is the only game 
in town, and when we do not meet our Federal obligation, there is no 
other program to pick up the slack. Other Federal education programs, 
such as title I, supplement insufficient local resources.
  Importantly, Impact Aid is a Federal program that addresses Federal 
needs. Our bill recognizes that providing Impact Aid resources on time 
and in full helps federally impacted students learn and achieve. It 
also recognizes that Impact Aid funds are better spent in our schools 
than on plane tickets and expenses for Impact Aid officials to come to 
Washington to fight for dollars that they inherently deserve.
  Finally, I want to say a little about my personal perspective on 
education. I honestly believe there is nothing more important than 
giving our children the best opportunities to succeed in life. That is 
a principle I hold very deeply. Nothing we can do for our children will 
make a bigger difference in their lives than giving them a solid 
education. Education provides greater advantages in the workplace, and 
greater personal enrichment; both of which lead to future personal and 
professional success. I have always believed that a quality public 
education system is not only the right of every child, but also the key 
to smart economic development. The investments we make in our education 
system today will provide our children with the skills and knowledge to 
be successful in the 21st century economy.
  Our bill recognizes the importance of education and makes sure that 
our federally impacted school districts receive the money they deserve. 
More importantly, our bill makes sure that students in federally 
impacted schools will have an education that will prepare them for 
personal and professional success.
                                 ______
                                 
      By Mr. HAGEL (for himself, Mr. Ensign, Mr. Lugar, and Mr. 
        Inhofe):
  S. 778. A bill to amend title XVII of the Social Security Act to 
provide medicare beneficiaries with a drug discount card that ensures 
access to affordable prescription drugs; to the Committee on Finance.
  Mr. HAGEL. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 778

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Medicare 
     Rx Drug Discount and Security Act of 2003''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Voluntary Medicare Prescription Drug Discount and Security 
              Program.

 ``Part D--Voluntary Medicare Prescription Drug Discount and Security 
                                Program

``Sec. 1860. Definitions.
``Sec. 1860A. Establishment of program.
``Sec. 1860B. Enrollment.
``Sec. 1860C. Providing enrollment and coverage information to 
              beneficiaries.
``Sec. 1860D. Enrollee protections.
``Sec. 1860E. Annual enrollment fee.
``Sec. 1860F. Benefits under the program.
``Sec. 1860G. Requirements for entities to provide prescription drug 
              coverage.
``Sec. 1860H. Payments to eligible entities for administering the 
              catastrophic benefit.
``Sec. 1860I. Determination of income levels.
``Sec. 1860J. Appropriations.
``Sec. 1860K. Medicare Competition and Prescription Drug Advisory 
              Board.''.
Sec. 3. Administration of Voluntary Medicare Prescription Drug Discount 
              and Security Program.
Sec. 4. Exclusion of part D costs from determination of part B monthly 
              premium.
Sec. 5. Medigap revisions.

     SEC. 2. VOLUNTARY MEDICARE PRESCRIPTION DRUG DISCOUNT AND 
                   SECURITY PROGRAM.

       (a) Establishment of Program.--Title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.) is amended--
       (1) by redesignating part D as part E; and
       (2) by inserting after part C the following new part:

 ``Part D--Voluntary Medicare Prescription Drug Discount and Security 
                                Program


                             ``definitions

       ``Sec. 1860. In this part:

[[Page 8378]]

       ``(1) Covered drug.--
       ``(A) In general.--Except as provided in this paragraph, 
     the term `covered drug' means--
       ``(i) a drug that may be dispensed only upon a prescription 
     and that is described in subparagraph (A)(i) or (A)(ii) of 
     section 1927(k)(2); or
       ``(ii) a biological product described in clauses (i) 
     through (iii) of subparagraph (B) of such section or insulin 
     described in subparagraph (C) of such section,

     and such term includes a vaccine licensed under section 351 
     of the Public Health Service Act and any use of a covered 
     drug for a medically accepted indication (as defined in 
     section 1927(k)(6)).
       ``(B) Exclusions.--
       ``(i) In general.--Such term does not include drugs or 
     classes of drugs, or their medical uses, which may be 
     excluded from coverage or otherwise restricted under section 
     1927(d)(2), other than subparagraph (E) thereof (relating to 
     smoking cessation agents), or under section 1927(d)(3).
       ``(ii) Avoidance of duplicate coverage.--A drug prescribed 
     for an individual that would otherwise be a covered drug 
     under this part shall not be so considered if payment for 
     such drug is available under part A or B for an individual 
     entitled to benefits under part A and enrolled under part B.
       ``(C) Application of formulary restrictions.--A drug 
     prescribed for an individual that would otherwise be a 
     covered drug under this part shall not be so considered under 
     a plan if the plan excludes the drug under a formulary and 
     such exclusion is not successfully appealed under section 
     1860D(a)(4)(B).
       ``(D) Application of general exclusion provisions.--A 
     prescription drug discount card plan or Medicare+Choice plan 
     may exclude from qualified prescription drug coverage any 
     covered drug--
       ``(i) for which payment would not be made if section 
     1862(a) applied to part D; or
       ``(ii) which are not prescribed in accordance with the plan 
     or this part.

     Such exclusions are determinations subject to reconsideration 
     and appeal pursuant to section 1860D(a)(4).
       ``(2) Eligible beneficiary.--The term `eligible 
     beneficiary' means an individual who is--
       ``(A) eligible for benefits under part A or enrolled under 
     part B; and
       ``(B) not eligible for prescription drug coverage under a 
     State plan under the medicaid program under title XIX.
       ``(3) Eligible entity.--The term `eligible entity' means 
     any--
       ``(A) pharmaceutical benefit management company;
       ``(B) wholesale pharmacy delivery system;
       ``(C) retail pharmacy delivery system;
       ``(D) insurer (including any issuer of a medicare 
     supplemental policy under section 1882);
       ``(E) Medicare+Choice organization;
       ``(F) State (in conjunction with a pharmaceutical benefit 
     management company);
       ``(G) employer-sponsored plan;
       ``(H) other entity that the Secretary determines to be 
     appropriate to provide benefits under this part; or
       ``(I) combination of the entities described in 
     subparagraphs (A) through (H).
       ``(4) Poverty line.--The term `poverty line' means the 
     income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved.
       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of Health and Human Services, acting through the 
     Administrator of the Centers for Medicare & Medicaid 
     Services.


                       ``establishment of program

       ``Sec. 1860A. (a) Provision of Benefit.--The Secretary 
     shall establish a Medicare Prescription Drug Discount and 
     Security Program under which the Secretary endorses 
     prescription drug card plans offered by eligible entities in 
     which eligible beneficiaries may voluntarily enroll and 
     receive benefits under this part.
       ``(b) Endorsement of Prescription Drug Discount Card 
     Plans.--
       ``(1) In general.--The Secretary shall endorse a 
     prescription drug card plan offered by an eligible entity 
     with a contract under this part if the eligible entity meets 
     the requirements of this part with respect to that plan.
       ``(2) National plans.--In addition to other types of plans, 
     the Secretary may endorse national prescription drug plans 
     under paragraph (1).
       ``(c) Voluntary Nature of Program.--Nothing in this part 
     shall be construed as requiring an eligible beneficiary to 
     enroll in the program under this part.
       ``(d) Financing.--The costs of providing benefits under 
     this part shall be payable from the Federal Supplementary 
     Medical Insurance Trust Fund established under section 1841.


                              ``enrollment

       ``Sec. 1860B. (a) Enrollment Under Part D.--
       ``(1) Establishment of process.--
       ``(A) In general.--The Secretary shall establish a process 
     through which an eligible beneficiary (including an eligible 
     beneficiary enrolled in a Medicare+Choice plan offered by a 
     Medicare+Choice organization) may make an election to enroll 
     under this part. Except as otherwise provided in this 
     subsection, such process shall be similar to the process for 
     enrollment under part B under section 1837.
       ``(B) Requirement of enrollment.--An eligible beneficiary 
     must enroll under this part in order to be eligible to 
     receive the benefits under this part.
       ``(2) Enrollment periods.--
       ``(A) In general.--Except as provided in this paragraph, an 
     eligible beneficiary may not enroll in the program under this 
     part during any period after the beneficiary's initial 
     enrollment period under part B (as determined under section 
     1837).
       ``(B) Special enrollment period.--In the case of eligible 
     beneficiaries that have recently lost eligibility for 
     prescription drug coverage under a State plan under the 
     medicaid program under title XIX, the Secretary shall 
     establish a special enrollment period in which such 
     beneficiaries may enroll under this part.
       ``(C) Open enrollment period in 2004 for current 
     beneficiaries.--The Secretary shall establish a period, which 
     shall begin on the date on which the Secretary first begins 
     to accept elections for enrollment under this part, during 
     which any eligible beneficiary may--
       ``(i) enroll under this part; or
       ``(ii) enroll or reenroll under this part after having 
     previously declined or terminated such enrollment.
       ``(3) Period of coverage.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     and subject to subparagraph (C), an eligible beneficiary's 
     coverage under the program under this part shall be effective 
     for the period provided under section 1838, as if that 
     section applied to the program under this part.
       ``(B) Enrollment during open and special enrollment.--
     Subject to subparagraph (C), an eligible beneficiary who 
     enrolls under the program under this part under subparagraph 
     (B) or (C) of paragraph (2) shall be entitled to the benefits 
     under this part beginning on the first day of the month 
     following the month in which such enrollment occurs.
       ``(4) Part d coverage terminated by termination of coverage 
     under parts a and b or eligibility for medical assistance.--
       ``(A) In general.--In addition to the causes of termination 
     specified in section 1838, the Secretary shall terminate an 
     individual's coverage under this part if the individual is--
       ``(i) no longer enrolled in part A or B; or
       ``(ii) eligible for prescription drug coverage under a 
     State plan under the medicaid program under title XIX.
       ``(B) Effective date.--The termination described in 
     subparagraph (A) shall be effective on the effective date 
     of--
       ``(i) the termination of coverage under part A or (if 
     later) under part B; or
       ``(ii) the coverage under title XIX.
       ``(b) Enrollment With Eligible Entity.--
       ``(1) Process.--The Secretary shall establish a process 
     through which an eligible beneficiary who is enrolled under 
     this part shall make an annual election to enroll in a 
     prescription drug card plan offered by an eligible entity 
     that has been awarded a contract under this part and serves 
     the geographic area in which the beneficiary resides.
       ``(2) Election periods.--
       ``(A) In general.--Except as provided in this paragraph, 
     the election periods under this subsection shall be the same 
     as the coverage election periods under the Medicare+Choice 
     program under section 1851(e), including--
       ``(i) annual coordinated election periods; and
       ``(ii) special election periods.

     In applying the last sentence of section 1851(e)(4) (relating 
     to discontinuance of a Medicare+Choice election during the 
     first year of eligibility) under this subparagraph, in the 
     case of an election described in such section in which the 
     individual had elected or is provided qualified prescription 
     drug coverage at the time of such first enrollment, the 
     individual shall be permitted to enroll in a prescription 
     drug card plan under this part at the time of the election of 
     coverage under the original fee-for-service plan.
       ``(B) Initial election periods.--
       ``(i) Individuals currently covered.--In the case of an 
     individual who is entitled to benefits under part A or 
     enrolled under part B as of November 1, 2004, there shall be 
     an initial election period of 6 months beginning on that 
     date.
       ``(ii) Individual covered in future.--In the case of an 
     individual who is first entitled to benefits under part A or 
     enrolled under part B after such date, there shall be an 
     initial election period which is the same as the initial 
     enrollment period under section 1837(d).
       ``(C) Additional special election periods.--The 
     Administrator shall establish special election periods--
       ``(i) in cases of individuals who have and involuntarily 
     lose prescription drug coverage described in paragraph (3);
       ``(ii) in cases described in section 1837(h) (relating to 
     errors in enrollment), in the

[[Page 8379]]

     same manner as such section applies to part B; and
       ``(iii) in the case of an individual who meets such 
     exceptional conditions (including conditions provided under 
     section 1851(e)(4)(D)) as the Secretary may provide.
       ``(D) Enrollment with one plan only.--The rules established 
     under subparagraph (B) shall ensure that an eligible 
     beneficiary may only enroll in 1 prescription drug card plan 
     offered by an eligible entity per year.
       ``(3) Medicare+choice enrollees.--An eligible beneficiary 
     who is enrolled under this part and enrolled in a 
     Medicare+Choice plan offered by a Medicare+Choice 
     organization must enroll in a prescription drug discount card 
     plan offered by an eligible entity in order to receive 
     benefits under this part. The beneficiary may elect to 
     receive such benefits through the Medicare+Choice 
     organization in which the beneficiary is enrolled if the 
     organization has been awarded a contract under this part.
       ``(4) Continuous prescription drug coverage.--An individual 
     is considered for purposes of this part to be maintaining 
     continuous prescription drug coverage on and after the date 
     the individual first qualifies to elect prescription drug 
     coverage under this part if the individual establishes that 
     as of such date the individual is covered under any of the 
     following prescription drug coverage and before the date that 
     is the last day of the 63-day period that begins on the date 
     of termination of the particular prescription drug coverage 
     involved (regardless of whether the individual subsequently 
     obtains any of the following prescription drug coverage):
       ``(A) Coverage under prescription drug card plan or 
     medicare+choice plan.--Prescription drug coverage under a 
     prescription drug card plan under this part or under a 
     Medicare+Choice plan.
       ``(B) Medicaid prescription drug coverage.--Prescription 
     drug coverage under a medicaid plan under title XIX, 
     including through the Program of All-inclusive Care for the 
     Elderly (PACE) under section 1934, through a social health 
     maintenance organization (referred to in section 4104(c) of 
     the Balanced Budget Act of 1997), or through a 
     Medicare+Choice project that demonstrates the application of 
     capitation payment rates for frail elderly medicare 
     beneficiaries through the use of an interdisciplinary team 
     and through the provision of primary care services to such 
     beneficiaries by means of such a team at the nursing facility 
     involved.
       ``(C) Prescription drug coverage under group health plan.--
     Any prescription drug coverage under a group health plan, 
     including a health benefits plan under the Federal Employees 
     Health Benefit Plan under chapter 89 of title 5, United 
     States Code, and a qualified retiree prescription drug plan 
     (as defined by the Secretary), but only if (subject to 
     subparagraph (E)(ii)) the coverage provides benefits at least 
     equivalent to the benefits under a prescription drug card 
     plan under this part.
       ``(D) Prescription drug coverage under certain medigap 
     policies.--Coverage under a medicare supplemental policy 
     under section 1882 that provides benefits for prescription 
     drugs (whether or not such coverage conforms to the standards 
     for packages of benefits under section 1882(p)(1)) and if 
     (subject to subparagraph (E)(ii)) the coverage provides 
     benefits at least equivalent to the benefits under a 
     prescription drug card plan under this part.
       ``(E) State pharmaceutical assistance program.--Coverage of 
     prescription drugs under a State pharmaceutical assistance 
     program, but only if (subject to subparagraph (E)(ii)) the 
     coverage provides benefits at least equivalent to the 
     benefits under a prescription drug card plan under this part.
       ``(F) Veterans' coverage of prescription drugs.--Coverage 
     of prescription drugs for veterans under chapter 17 of title 
     38, United States Code, but only if (subject to subparagraph 
     (E)(ii)) the coverage provides benefits at least equivalent 
     to the benefits under a prescription drug card plan under 
     this part.

     For purposes of carrying out this paragraph, the 
     certifications of the type described in sections 2701(e) of 
     the Public Health Service Act and in section 9801(e) of the 
     Internal Revenue Code of 1986 shall also include a statement 
     for the period of coverage of whether the individual involved 
     had prescription drug coverage described in this paragraph.
       ``(5) Competition.--Each eligible entity with a contract 
     under this part shall compete for the enrollment of 
     beneficiaries in a prescription drug card plan offered by the 
     entity on the basis of discounts, formularies, pharmacy 
     networks, and other services provided for under the contract.


    ``providing enrollment and coverage information to beneficiaries

       ``Sec. 1860C. (a) Activities.--The Secretary shall provide 
     for activities under this part to broadly disseminate 
     information to eligible beneficiaries (and prospective 
     eligible beneficiaries) regarding enrollment under this part 
     and the prescription drug card plans offered by eligible 
     entities with a contract under this part.
       ``(b) Special Rule for First Enrollment Under the 
     Program.--To the extent practicable, the activities described 
     in subsection (a) shall ensure that eligible beneficiaries 
     are provided with such information at least 60 days prior to 
     the first enrollment period described in section 1860B(c).


                         ``enrollee protections

       ``Sec. 1860D. (a) Requirements for All Eligible Entities.--
     Each eligible entity shall meet the following requirements:
       ``(1) Guaranteed issuance and nondiscrimination.--
       ``(A) Guaranteed issuance.--
       ``(i) In general.--An eligible beneficiary who is eligible 
     to enroll in a prescription drug card plan offered by an 
     eligible entity under section 1860B(b) for prescription drug 
     coverage under this part at a time during which elections are 
     accepted under this part with respect to the coverage shall 
     not be denied enrollment based on any health status-related 
     factor (described in section 2702(a)(1) of the Public Health 
     Service Act) or any other factor.
       ``(ii) Medicare+choice limitations permitted.--The 
     provisions of paragraphs (2) and (3) (other than subparagraph 
     (C)(i), relating to default enrollment) of section 1851(g) 
     (relating to priority and limitation on termination of 
     election) shall apply to eligible entities under this 
     subsection.
       ``(B) Nondiscrimination.--An eligible entity offering 
     prescription drug coverage under this part shall not 
     establish a service area in a manner that would discriminate 
     based on health or economic status of potential enrollees.
       ``(2) Disclosure of information.--
       ``(A) Information.--
       ``(i) General information.--Each eligible entity with a 
     contract under this part to provide a prescription drug card 
     plan shall disclose, in a clear, accurate, and standardized 
     form to each eligible beneficiary enrolled in a prescription 
     drug discount card program offered by such entity under this 
     part at the time of enrollment and at least annually 
     thereafter, the information described in section 1852(c)(1) 
     relating to such prescription drug coverage.
       ``(ii) Specific information.--In addition to the 
     information described in clause (i), each eligible entity 
     with a contract under this part shall disclose the following:

       ``(I) How enrollees will have access to covered drugs, 
     including access to such drugs through pharmacy networks.
       ``(II) How any formulary used by the eligible entity 
     functions.
       ``(III) Information on grievance and appeals procedures.
       ``(IV) Information on enrollment fees and prices charged to 
     the enrollee for covered drugs.
       ``(V) Any other information that the Secretary determines 
     is necessary to promote informed choices by eligible 
     beneficiaries among eligible entities.

       ``(B) Disclosure upon request of general coverage, 
     utilization, and grievance information.--Upon request of an 
     eligible beneficiary, the eligible entity shall provide the 
     information described in paragraph (3) to such beneficiary.
       ``(C) Response to beneficiary questions.--Each eligible 
     entity offering a prescription drug discount card plan under 
     this part shall have a mechanism for providing specific 
     information to enrollees upon request. The entity shall make 
     available, through an Internet website and, upon request, in 
     writing, information on specific changes in its formulary.
       ``(3) Grievance mechanism, coverage determinations, and 
     reconsiderations.--
       ``(A) In general.--With respect to the benefit under this 
     part, each eligible entity offering a prescription drug 
     discount card plan shall provide meaningful procedures for 
     hearing and resolving grievances between the organization 
     (including any entity or individual through which the 
     eligible entity provides covered benefits) and enrollees with 
     prescription drug card plans of the eligible entity under 
     this part in accordance with section 1852(f).
       ``(B) Application of coverage determination and 
     reconsideration provisions.--Each eligible entity shall meet 
     the requirements of paragraphs (1) through (3) of section 
     1852(g) with respect to covered benefits under the 
     prescription drug card plan it offers under this part in the 
     same manner as such requirements apply to a Medicare+Choice 
     organization with respect to benefits it offers under a 
     Medicare+Choice plan under part C.
       ``(C) Request for review of tiered formulary 
     determinations.--In the case of a prescription drug card plan 
     offered by an eligible entity that provides for tiered cost-
     sharing for drugs included within a formulary and provides 
     lower cost-sharing for preferred drugs included within the 
     formulary, an individual who is enrolled in the plan may 
     request coverage of a nonpreferred drug under the terms 
     applicable for preferred drugs if the prescribing physician 
     determines that the preferred drug for treatment of the same 
     condition is not as effective for the individual or has 
     adverse effects for the individual.
       ``(4) Appeals.--
       ``(A) In general.--Subject to subparagraph (B), each 
     eligible entity offering a prescription drug card plan shall 
     meet the requirements of paragraphs (4) and (5) of section 
     1852(g) with respect to drugs not included on any formulary 
     in the same manner as such

[[Page 8380]]

     requirements apply to a Medicare+Choice organization with 
     respect to benefits it offers under a Medicare+Choice plan 
     under part C.
       ``(B) Formulary determinations.--An individual who is 
     enrolled in a prescription drug card plan offered by an 
     eligible entity may appeal to obtain coverage under this part 
     for a covered drug that is not on a formulary of the eligible 
     entity if the prescribing physician determines that the 
     formulary drug for treatment of the same condition is not as 
     effective for the individual or has adverse effects for the 
     individual.
       ``(5) Confidentiality and accuracy of enrollee records.--
     Each eligible entity offering a prescription drug discount 
     card plan shall meet the requirements of the Health Insurance 
     Portability and Accountability Act of 1996.
       ``(b) Eligible Entities Offering a Discount Card Program.--
     If an eligible entity offers a discount card program under 
     this part, in addition to the requirements under subsection 
     (a), the entity shall meet the following requirements:
       ``(1) Access to covered benefits.--
       ``(A) Assuring pharmacy access.--
       ``(i) In general.--The eligible entity offering the 
     prescription drug discount card plan shall secure the 
     participation in its network of a sufficient number of 
     pharmacies that dispense (other than by mail order) drugs 
     directly to patients to ensure convenient access (as 
     determined by the Secretary and including adequate emergency 
     access) for enrolled beneficiaries, in accordance with 
     standards established under section 1860D(a)(3) that ensure 
     such convenient access.
       ``(ii) Use of point-of-service system.--Each eligible 
     entity offering a prescription drug discount card plan shall 
     establish an optional point-of-service method of operation 
     under which--

       ``(I) the plan provides access to any or all pharmacies 
     that are not participating pharmacies in its network; and
       ``(II) discounts under the plan may not be available.

     The additional copayments so charged shall not be counted as 
     out-of-pocket expenses for purposes of section 1860F(b).
       ``(B) Use of standardized technology.--
       ``(i) In general.--Each eligible entity offering a 
     prescription drug discount card plan shall issue (and 
     reissue, as appropriate) such a card (or other technology) 
     that may be used by an enrolled beneficiary to assure access 
     to negotiated prices under section 1860F(a) for the purchase 
     of prescription drugs for which coverage is not otherwise 
     provided under the prescription drug discount card plan.
       ``(ii) Standards.--The Secretary shall provide for the 
     development of national standards relating to a standardized 
     format for the card or other technology referred to in clause 
     (i). Such standards shall be compatible with standards 
     established under part C of title XI.
       ``(C) Requirements on development and application of 
     formularies.--If an eligible entity that offers a 
     prescription drug discount card plan uses a formulary, the 
     following requirements must be met:
       ``(i) Pharmacy and therapeutic (p&t) committee.--The 
     eligible entity must establish a pharmacy and therapeutic 
     committee that develops and reviews the formulary. Such 
     committee shall include at least 1 physician and at least 1 
     pharmacist both with expertise in the care of elderly or 
     disabled persons and a majority of its members shall consist 
     of individuals who are a physician or a practicing pharmacist 
     (or both).
       ``(ii) Formulary development.--In developing and reviewing 
     the formulary, the committee shall base clinical decisions on 
     the strength of scientific evidence and standards of 
     practice, including assessing peer-reviewed medical 
     literature, such as randomized clinical trials, 
     pharmacoeconomic studies, outcomes research data, and such 
     other information as the committee determines to be 
     appropriate.
       ``(iii) Inclusion of drugs in all therapeutic categories.--
     The formulary must include drugs within each therapeutic 
     category and class of covered drugs (although not necessarily 
     for all drugs within such categories and classes).
       ``(iv) Provider education.--The committee shall establish 
     policies and procedures to educate and inform health care 
     providers concerning the formulary.
       ``(v) Notice before removing drugs from formulary.--Any 
     removal of a drug from a formulary shall take effect only 
     after appropriate notice is made available to beneficiaries 
     and physicians.
       ``(vi) Grievances and appeals relating to application of 
     formularies.--For provisions relating to grievances and 
     appeals of coverage, see paragraphs (3) and (4) of section 
     1860D(a).
       ``(2) Cost and utilization management; quality assurance; 
     medication therapy management program.--
       ``(A) In general.--Each eligible entity offering a 
     prescription drug discount card plan shall have in place with 
     respect to covered drugs--
       ``(i) an effective cost and drug utilization management 
     program, including medically appropriate incentives to use 
     generic drugs and therapeutic interchange, when appropriate;
       ``(ii) quality assurance measures and systems to reduce 
     medical errors and adverse drug interactions, including a 
     medication therapy management program described in 
     subparagraph (B); and
       ``(iii) a program to control fraud, abuse, and waste.

     Nothing in this section shall be construed as impairing an 
     eligible entity from applying cost management tools 
     (including differential payments) under all methods of 
     operation.
       ``(B) Medication therapy management program.--
       ``(i) In general.--A medication therapy management program 
     described in this paragraph is a program of drug therapy 
     management and medication administration that is designed to 
     ensure, with respect to beneficiaries with chronic diseases 
     (such as diabetes, asthma, hypertension, and congestive heart 
     failure) or multiple prescriptions, that covered drugs under 
     the prescription drug discount card plan are appropriately 
     used to achieve therapeutic goals and reduce the risk of 
     adverse events, including adverse drug interactions.
       ``(ii) Elements.--Such program may include--

       ``(I) enhanced beneficiary understanding of such 
     appropriate use through beneficiary education, counseling, 
     and other appropriate means;
       ``(II) increased beneficiary adherence with prescription 
     medication regimens through medication refill reminders, 
     special packaging, and other appropriate means; and
       ``(III) detection of patterns of overuse and underuse of 
     prescription drugs.

       ``(iii) Development of program in cooperation with licensed 
     pharmacists.--The program shall be developed in cooperation 
     with licensed pharmacists and physicians.
       ``(iv) Considerations in pharmacy fees.--Each eligible 
     entity offering a prescription drug discount card plan shall 
     take into account, in establishing fees for pharmacists and 
     others providing services under the medication therapy 
     management program, the resources and time used in 
     implementing the program.
       ``(C) Treatment of accreditation.--Section 1852(e)(4) 
     (relating to treatment of accreditation) shall apply to 
     prescription drug discount card plans under this part with 
     respect to the following requirements, in the same manner as 
     they apply to Medicare+Choice plans under part C with respect 
     to the requirements described in a clause of section 
     1852(e)(4)(B):
       ``(i) Paragraph (1) (including quality assurance), 
     including any medication therapy management program under 
     paragraph (2).
       ``(ii) Subsection (c)(1) (relating to access to covered 
     benefits).
       ``(iii) Subsection (g) (relating to confidentiality and 
     accuracy of enrollee records).
       ``(D) Public disclosure of pharmaceutical prices for 
     equivalent drugs.--Each eligible entity offering a 
     prescription drug discount card plan shall provide that each 
     pharmacy or other dispenser that arranges for the dispensing 
     of a covered drug shall inform the beneficiary at the time of 
     purchase of the drug of any differential between the price of 
     the prescribed drug to the enrollee and the price of the 
     lowest cost drug covered under the plan that is 
     therapeutically equivalent and bioequivalent.


                        ``annual enrollment fee

       ``Sec. 1860E. (a) Amount.--
       ``(1) In general.--Except as provided in subsection (c), 
     enrollment under the program under this part is conditioned 
     upon payment of an annual enrollment fee of $25.
       ``(2) Annual percentage increase.--
       ``(A) In general.--In the case of any calendar year 
     beginning after 2005, the dollar amount in paragraph (1) 
     shall be increased by an amount equal to--
       ``(i) such dollar amount; multiplied by
       ``(ii) the inflation adjustment.
       ``(B) Inflation adjustment.--For purposes of subparagraph 
     (A)(ii), the inflation adjustment for any calendar year is 
     the percentage (if any) by which--
       ``(i) the average per capita aggregate expenditures for 
     covered drugs in the United States for medicare 
     beneficiaries, as determined by the Secretary for the 12-
     month period ending in July of the previous year; exceeds
       ``(ii) such aggregate expenditures for the 12-month period 
     ending with July 2004.
       ``(C) Rounding.--If any increase determined under clause 
     (ii) is not a multiple of $1, such increase shall be rounded 
     to the nearest multiple of $1.
       ``(b) Collection of Annual Enrollment Fee.--
       ``(1) In general.--Unless the eligible beneficiary makes an 
     election under paragraph (2), the annual enrollment fee 
     described in subsection (a) shall be collected and credited 
     to the Federal Supplementary Medical Insurance Trust Fund in 
     the same manner as the monthly premium determined under 
     section 1839 is collected and credited to such Trust Fund 
     under section 1840.
       ``(2) Direct payment.--An eligible beneficiary may elect to 
     pay the annual enrollment fee directly or in any other manner 
     approved by the Secretary. The Secretary shall

[[Page 8381]]

     establish procedures for making such an election.
       ``(c) Waiver.--The Secretary shall waive the enrollment fee 
     described in subsection (a) in the case of an eligible 
     beneficiary whose income is below 200 percent of the poverty 
     line.


                      ``benefits under the program

       ``Sec. 1860F. (a) Access to Negotiated Prices.--
       ``(1) Negotiated prices.--
       ``(A) In general.--Subject to subparagraph (B), each 
     prescription drug card plan offering a discount card program 
     by an eligible entity with a contract under this part shall 
     provide each eligible beneficiary enrolled in such plan with 
     access to negotiated prices (including applicable discounts) 
     for such prescription drugs as the eligible entity determines 
     appropriate. Such discounts may include discounts for 
     nonformulary drugs. If such a beneficiary becomes eligible 
     for the catastrophic benefit under subsection (b), the 
     negotiated prices (including applicable discounts) shall 
     continue to be available to the beneficiary for those 
     prescription drugs for which payment may not be made under 
     section 1860H(b). For purposes of this subparagraph, the term 
     `prescription drugs' is not limited to covered drugs, but 
     does not include any over-the-counter drug that is not a 
     covered drug.
       ``(B) Limitations.--
       ``(i) Formulary restrictions.--Insofar as an eligible 
     entity with a contract under this part uses a formulary, the 
     negotiated prices (including applicable discounts) for 
     nonformulary drugs may differ.
       ``(ii) Avoidance of duplicate coverage.--The negotiated 
     prices (including applicable discounts) for prescription 
     drugs shall not be available for any drug prescribed for an 
     eligible beneficiary if payment for the drug is available 
     under part A or B (but such negotiated prices shall be 
     available if payment under part A or B is not available 
     because the beneficiary has not met the deductible or has 
     exhausted benefits under part A or B).
       ``(2) Discount card.--The Secretary shall develop a uniform 
     standard card format to be issued by each eligible entity 
     offering a prescription drug discount card plan that shall be 
     used by an enrolled beneficiary to ensure the access of such 
     beneficiary to negotiated prices under paragraph (1).
       ``(3) Ensuring discounts in all areas.--The Secretary shall 
     develop procedures that ensure that each eligible beneficiary 
     that resides in an area where no prescription drug discount 
     card plans are available is provided with access to 
     negotiated prices for prescription drugs (including 
     applicable discounts).
       ``(b) Catastrophic Benefit.--
       ``(1) Ten percent cost-sharing.--Subject to any formulary 
     used by the prescription drug discount card program in which 
     the eligible beneficiary is enrolled, the catastrophic 
     benefit shall provide benefits with cost-sharing that is 
     equal to 10 percent of the negotiated price (taking into 
     account any applicable discounts) of each drug dispensed to 
     such beneficiary after the beneficiary has incurred costs (as 
     described in paragraph (3)) for covered drugs in a year equal 
     to the applicable annual out-of-pocket limit specified in 
     paragraph (2).
       ``(2) Annual out-of-pocket limits.--For purposes of this 
     part, the annual out-of-pocket limits specified in this 
     paragraph are as follows:
       ``(A) Beneficiaries with annual incomes below 200 percent 
     of the poverty line.--In the case of an eligible beneficiary 
     whose income (as determined under section 1860I) is below 200 
     percent of the poverty line, the annual out-of-pocket limit 
     is equal to $1,500.
       ``(B) Beneficiaries with annual incomes between 200 and 400 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     200 percent, but does not exceed 400 percent, of the poverty 
     line, the annual out-of-pocket limit is equal to $3,500.
       ``(C) Beneficiaries with annual incomes between 400 and 600 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     400 percent, but does not exceed 600 percent, of the poverty 
     line, the annual out-of-pocket limit is equal to $5,500.
       ``(D) Beneficiaries with annual incomes that exceed 600 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     600 percent of the poverty line, the annual out-of-pocket 
     limit is an amount equal to 20 percent of that beneficiary's 
     income for that year (rounded to the nearest multiple of $1).
       ``(3) Application.--In applying paragraph (2), incurred 
     costs shall only include those expenses for covered drugs 
     that are incurred by the eligible beneficiary using a card 
     approved by the Secretary under this part that are paid by 
     that beneficiary and for which the beneficiary is not 
     reimbursed (through insurance or otherwise) by another 
     person.
       ``(4) Annual percentage increase.--
       ``(A) In general.--In the case of any calendar year after 
     2005, the dollar amounts in subparagraphs (A), (B), and (C) 
     of paragraph (2) shall be increased by an amount equal to--
       ``(i) such dollar amount; multiplied by
       ``(ii) the inflation adjustment determined under section 
     1860E(a)(2)(B) for such calendar year.
       ``(B) Rounding.--If any increase determined under 
     subparagraph (A) is not a multiple of $1, such increase shall 
     be rounded to the nearest multiple of $1.
       ``(5) Eligible entity not at financial risk for 
     catastrophic benefit.--
       ``(A) In general.--The Secretary, and not the eligible 
     entity, shall be at financial risk for the provision of the 
     catastrophic benefit under this subsection.
       ``(B) Provisions relating to payments to eligible 
     entities.--For provisions relating to payments to eligible 
     entities for administering the catastrophic benefit under 
     this subsection, see section 1860H.
       ``(6) Ensuring catastrophic benefit in all areas.--The 
     Secretary shall develop procedures for the provision of the 
     catastrophic benefit under this subsection to each eligible 
     beneficiary that resides in an area where there are no 
     prescription drug discount card plans offered that have been 
     awarded a contract under this part.


   ``requirements for entities to provide prescription drug coverage

       ``Sec. 1860G. (a) Establishment of Bidding Process.--The 
     Secretary shall establish a process under which the Secretary 
     accepts bids from eligible entities and awards contracts to 
     the entities to provide the benefits under this part to 
     eligible beneficiaries in an area.
       ``(b) Submission of Bids.--Each eligible entity desiring to 
     enter into a contract under this part shall submit a bid to 
     the Secretary at such time, in such manner, and accompanied 
     by such information as the Secretary may require.
       ``(c) Administrative Fee Bid.--
       ``(1) Submission.--For the bid described in subsection (b), 
     each entity shall submit to the Secretary information 
     regarding administration of the discount card and 
     catastrophic benefit under this part.
       ``(2) Bid submission requirements.--
       ``(A) Administrative fee bid submission.--In submitting 
     bids, the entities shall include separate costs for 
     administering the discount card component, if applicable, and 
     the catastrophic benefit. The entity shall submit the 
     administrative fee bid in a form and manner specified by the 
     Secretary, and shall include a statement of projected 
     enrollment and a separate statement of the projected 
     administrative costs for at least the following functions:
       ``(i) Enrollment, including income eligibility 
     determination.
       ``(ii) Claims processing.
       ``(iii) Quality assurance, including drug utilization 
     review.
       ``(iv) Beneficiary and pharmacy customer service.
       ``(v) Coordination of benefits.
       ``(vi) Fraud and abuse prevention.
       ``(B) Negotiated administrative fee bid amounts.--The 
     Secretary has the authority to negotiate regarding the bid 
     amounts submitted. The Secretary may reject a bid if the 
     Secretary determines it is not supported by the 
     administrative cost information provided in the bid as 
     specified in subparagraph (A).
       ``(C) Payment to plans based on administrative fee bid 
     amounts.--The Secretary shall use the bid amounts to 
     calculate a benchmark amount consisting of the enrollment-
     weighted average of all bids for each function and each class 
     of entity. The class of entity is either a regional or 
     national entity, or such other classes as the Secretary may 
     determine to be appropriate. The functions are the discount 
     card and catastrophic components. If an eligible entity's 
     combined bid for both functions is above the combined 
     benchmark within the entity's class for the functions, the 
     eligible entity shall collect additional necessary revenue 
     through 1 or both of the following:
       ``(i) Additional fees charged to the beneficiary, not to 
     exceed $25 annually.
       ``(ii) Use of rebate amounts from drug manufacturers to 
     defray administrative costs.
       ``(d) Awarding of Contracts.--
       ``(1) In general.--The Secretary shall, consistent with the 
     requirements of this part and the goal of containing medicare 
     program costs, award at least 2 contracts in each area, 
     unless only 1 bidding entity meets the terms and conditions 
     specified by the Secretary under paragraph (2).
       ``(2) Terms and conditions.--The Secretary shall not award 
     a contract to an eligible entity under this section unless 
     the Secretary finds that the eligible entity is in compliance 
     with such terms and conditions as the Secretary shall 
     specify.
       ``(3) Requirements for eligible entities providing discount 
     card program.--Except as provided in subsection (e), in 
     determining which of the eligible entities that submitted 
     bids that meet the terms and conditions specified by the 
     Secretary under paragraph (2) to award a contract, the 
     Secretary shall consider whether the bid submitted by the 
     entity meets at least the following requirements:
       ``(A) Level of savings to medicare beneficiaries.--The 
     program passes on to medicare beneficiaries who enroll in the 
     program discounts on prescription drugs, including discounts 
     negotiated with manufacturers.
       ``(B) Prohibition on application only to mail order.--The 
     program applies to drugs that are available other than solely 
     through

[[Page 8382]]

     mail order and provides convenient access to retail 
     pharmacies.
       ``(C) Level of beneficiary services.--The program provides 
     pharmaceutical support services, such as education and 
     services to prevent adverse drug interactions.
       ``(D) Adequacy of information.--The program makes available 
     to medicare beneficiaries through the Internet and otherwise 
     information, including information on enrollment fees, prices 
     charged to beneficiaries, and services offered under the 
     program, that the Secretary identifies as being necessary to 
     provide for informed choice by beneficiaries among endorsed 
     programs.
       ``(E) Extent of demonstrated experience.--The entity 
     operating the program has demonstrated experience and 
     expertise in operating such a program or a similar program.
       ``(F) Extent of quality assurance.--The entity has in place 
     adequate procedures for assuring quality service under the 
     program.
       ``(G) Operation of assistance program.--The entity meets 
     such requirements relating to solvency, compliance with 
     financial reporting requirements, audit compliance, and 
     contractual guarantees as specified by the Secretary.
       ``(H) Privacy compliance.--The entity implements policies 
     and procedures to safeguard the use and disclosure of program 
     beneficiaries' individually identifiable health information 
     in a manner consistent with the Federal regulations 
     (concerning the privacy of individually identifiable health 
     information) promulgated under section 264(c) of the Health 
     Insurance Portability and Accountability Act of 1996.
       ``(I) Additional beneficiary protections.--The program 
     meets such additional requirements as the Secretary 
     identifies to protect and promote the interest of medicare 
     beneficiaries, including requirements that ensure that 
     beneficiaries are not charged more than the lower of the 
     negotiated retail price or the usual and customary price.
     The prices negotiated by a prescription drug discount card 
     program endorsed under this section shall (notwithstanding 
     any other provision of law) not be taken into account for the 
     purposes of establishing the best price under section 
     1927(c)(1)(C).
       ``(4) Beneficiary access to savings and rebates.--The 
     Secretary shall require eligible entities offering a discount 
     card program to pass on savings and rebates negotiated with 
     manufacturers to eligible beneficiaries enrolled with the 
     entity.
       ``(5) Negotiated agreements with employer-sponsored 
     plans.--Notwithstanding any other provision of this part, the 
     Secretary may negotiate agreements with employer-sponsored 
     plans under which eligible beneficiaries are provided with a 
     benefit for prescription drug coverage that is more generous 
     than the benefit that would otherwise have been available 
     under this part if such an agreement results in cost savings 
     to the Federal Government.
       ``(e) Requirements for Other Eligible Entities.--An 
     eligible entity that is licensed under State law to provide 
     the health insurance benefits under this section shall be 
     required to meet the requirements of subsection (d)(3). If an 
     eligible entity offers a national plan, such entity shall not 
     be required to meet the requirements of subsection (d)(3), 
     but shall meet the requirements of Employee Retirement Income 
     Security Act of 1974 that apply with respect to such plan.


  ``payments to eligible entities for administering the catastrophic 
                                benefit

       ``Sec. 1860H. (a) In General.--The Secretary may establish 
     procedures for making payments to an eligible entity under a 
     contract entered into under this part for--
       ``(1) the costs of providing covered drugs to beneficiaries 
     eligible for the benefit under this part in accordance with 
     subsection (b) minus the amount of any cost-sharing collected 
     by the eligible entity under section 1860F(b); and
       ``(2) costs incurred by the entity in administering the 
     catastrophic benefit in accordance with section 1860G.
       ``(b) Payment for Covered Drugs.--
       ``(1) In general.--Except as provided in subsection (c) and 
     subject to paragraph (2), the Secretary may only pay an 
     eligible entity for covered drugs furnished by the eligible 
     entity to an eligible beneficiary enrolled with such entity 
     under this part that is eligible for the catastrophic benefit 
     under section 1860F(b).
       ``(2) Limitations.--
       ``(A) Formulary restrictions.--Insofar as an eligible 
     entity with a contract under this part uses a formulary, the 
     Secretary may not make any payment for a covered drug that is 
     not included in such formulary, except to the extent provided 
     under section 1860D(a)(4)(B).
       ``(B) Negotiated prices.--The Secretary may not pay an 
     amount for a covered drug furnished to an eligible 
     beneficiary that exceeds the negotiated price (including 
     applicable discounts) that the beneficiary would have been 
     responsible for under section 1860F(a) or the price 
     negotiated for insurance coverage under the Medicare+Choice 
     program under part C, a medicare supplemental policy, 
     employer-sponsored coverage, or a State plan.
       ``(C) Cost-sharing limitations.--An eligible entity may not 
     charge an individual enrolled with such entity who is 
     eligible for the catastrophic benefit under this part any 
     copayment, tiered copayment, coinsurance, or other cost-
     sharing that exceeds 10 percent of the cost of the drug that 
     is dispensed to the individual.
       ``(3) Payment in competitive areas.--In a geographic area 
     in which 2 or more eligible entities offer a plan under this 
     part, the Secretary may negotiate an agreement with the 
     entity to reimburse the entity for costs incurred in 
     providing the benefit under this part on a capitated basis.
       ``(c) Secondary Payer Provisions.--The provisions of 
     section 1862(b) shall apply to the benefits provided under 
     this part.


                    ``determination of income levels

       ``Sec. 1860I. (a) Determination of Income Levels.--
       ``(1) In general.--The Secretary shall establish procedures 
     under which each eligible entity awarded a contract under 
     this part determines the income levels of eligible 
     beneficiaries enrolled in a prescription drug card plan 
     offered by that entity at least annually for purposes of 
     sections 1860E(c) and 1860F(b).
       ``(2) Procedures.--The procedures established under 
     paragraph (1) shall require each eligible beneficiary to 
     submit such information as the eligible entity requires to 
     make the determination described in paragraph (1).
       ``(b) Enforcement of Income Determinations.--The Secretary 
     shall--
       ``(1) establish procedures that ensure that eligible 
     beneficiaries comply with sections 1860E(c) and 1860F(b); and
       ``(2) require, if the Secretary determines that payments 
     were made under this part to which an eligible beneficiary 
     was not entitled, the repayment of any excess payments with 
     interest and a penalty.
       ``(c) Quality Control System.--
       ``(1) Establishment.--The Secretary shall establish a 
     quality control system to monitor income determinations made 
     by eligible entities under this section and to produce 
     appropriate and comprehensive measures of error rates.
       ``(2) Periodic audits.--The Inspector General of the 
     Department of Health and Human Services shall conduct 
     periodic audits to ensure that the system established under 
     paragraph (1) is functioning appropriately.


                            ``appropriations

       ``Sec. 1860J. There are authorized to be appropriated from 
     time to time, out of any moneys in the Treasury not otherwise 
     appropriated, to the Federal Supplementary Medical Insurance 
     Trust Fund established under section 1841, an amount equal to 
     the amount by which the benefits and administrative costs of 
     providing the benefits under this part exceed the enrollment 
     fees collected under section 1860E.


      ``medicare competition and prescription drug advisory board

       ``Sec. 1860K. (a) Establishment of Board.--There is 
     established a Medicare Prescription Drug Advisory Board (in 
     this section referred to as the `Board').
       ``(b) Advice on Policies; Reports.--
       ``(1) Advice on policies.--The Board shall advise the 
     Secretary on policies relating to the Voluntary Medicare 
     Prescription Drug Discount and Security Program under this 
     part.
       ``(2) Reports.--
       ``(A) In general.--With respect to matters of the 
     administration of the program under this part, the Board 
     shall submit to Congress and to the Secretary such reports as 
     the Board determines appropriate. Each such report may 
     contain such recommendations as the Board determines 
     appropriate for legislative or administrative changes to 
     improve the administration of the program under this part. 
     Each such report shall be published in the Federal Register.
       ``(B) Maintaining independence of board.--The Board shall 
     directly submit to Congress reports required under 
     subparagraph (A). No officer or agency of the United States 
     may require the Board to submit to any officer or agency of 
     the United States for approval, comments, or review, prior to 
     the submission to Congress of such reports.
       ``(c) Structure and Membership of the Board.--
       ``(1) Membership.--The Board shall be composed of 7 members 
     who shall be appointed as follows:
       ``(A) Presidential appointments.--
       ``(i) In general.--Three members shall be appointed by the 
     President, by and with the advice and consent of the Senate.
       ``(ii) Limitation.--Not more than 2 such members may be 
     from the same political party.
       ``(B) Senatorial appointments.--Two members (each member 
     from a different political party) shall be appointed by the 
     President pro tempore of the Senate with the advice of the 
     Chairman and the Ranking Minority Member of the Committee on 
     Finance of the Senate.
       ``(C) Congressional appointments.--Two members (each member 
     from a different political party) shall be appointed by the 
     Speaker of the House of Representatives, with the advice of 
     the Chairman and the Ranking Minority Member of the Committee 
     on Ways and Means of the House of Representatives.

[[Page 8383]]

       ``(2) Qualifications.--The members shall be chosen on the 
     basis of their integrity, impartiality, and good judgment, 
     and shall be individuals who are, by reason of their 
     education, experience, and attainments, exceptionally 
     qualified to perform the duties of members of the Board.
       ``(3) Composition.--Of the members appointed under 
     paragraph (1)--
       ``(A) at least 1 shall represent the pharmaceutical 
     industry;
       ``(B) at least 1 shall represent physicians;
       ``(C) at least 1 shall represent medicare beneficiaries;
       ``(D) at least 1 shall represent practicing pharmacists; 
     and
       ``(E) at least 1 shall represent eligible entities.
       ``(d) Terms of Appointment.--
       ``(1) In general.--Subject to paragraph (2), each member of 
     the Board shall serve for a term of 6 years.
       ``(2) Continuance in office and staggered terms.--
       ``(A) Continuance in office.--A member appointed to a term 
     of office after the commencement of such term may serve under 
     such appointment only for the remainder of such term.
       ``(B) Staggered terms.--The terms of service of the members 
     initially appointed under this section shall begin on January 
     1, 2005, and expire as follows:
       ``(i) Presidential appointments.--The terms of service of 
     the members initially appointed by the President shall expire 
     as designated by the President at the time of nomination, 1 
     each at the end of--

       ``(I) 2 years;
       ``(II) 4 years; and
       ``(III) 6 years.

       ``(ii) Senatorial appointments.--The terms of service of 
     members initially appointed by the President pro tempore of 
     the Senate shall expire as designated by the President pro 
     tempore of the Senate at the time of nomination, 1 each at 
     the end of--

       ``(I) 3 years; and
       ``(II) 6 years.

       ``(iii) Congressional appointments.--The terms of service 
     of members initially appointed by the Speaker of the House of 
     Representatives shall expire as designated by the Speaker of 
     the House of Representatives at the time of nomination, 1 
     each at the end of--

       ``(I) 4 years; and
       ``(II) 5 years.

       ``(C) Reappointments.--Any person appointed as a member of 
     the Board may not serve for more than 8 years.
       ``(D) Vacancies.--Any member appointed to fill a vacancy 
     occurring before the expiration of the term for which the 
     member's predecessor was appointed shall be appointed only 
     for the remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has taken 
     office. A vacancy in the Board shall be filled in the manner 
     in which the original appointment was made.
       ``(e) Chairperson.--A member of the Board shall be 
     designated by the President to serve as Chairperson for a 
     term of 4 years or, if the remainder of such member's term is 
     less than 4 years, for such remainder.
       ``(f) Expenses and Per Diem.--Members of the Board shall 
     serve without compensation, except that, while serving on 
     business of the Board away from their homes or regular places 
     of business, members may be allowed travel expenses, 
     including per diem in lieu of subsistence, as authorized by 
     section 5703 of title 5, United States Code, for persons in 
     the Government employed intermittently.
       ``(g) Meetings.--
       ``(1) In general.--The Board shall meet at the call of the 
     Chairperson (in consultation with the other members of the 
     Board) not less than 4 times each year to consider a specific 
     agenda of issues, as determined by the Chairperson in 
     consultation with the other members of the Board.
       ``(2) Quorum.--Four members of the Board (not more than 3 
     of whom may be of the same political party) shall constitute 
     a quorum for purposes of conducting business.
       ``(h) Federal Advisory Committee Act.--The Board shall be 
     exempt from the provisions of the Federal Advisory Committee 
     Act (5 U.S.C. App.).
       ``(i) Personnel.--
       ``(1) Staff director.--The Board shall, without regard to 
     the provisions of title 5, United States Code, relating to 
     the competitive service, appoint a Staff Director who shall 
     be paid at a rate equivalent to a rate established for the 
     Senior Executive Service under section 5382 of title 5, 
     United States Code.
       ``(2) Staff.--
       ``(A) In general.--The Board may employ, without regard to 
     chapter 31 of title 5, United States Code, such officers and 
     employees as are necessary to administer the activities to be 
     carried out by the Board.
       ``(B) Flexibility with respect to civil service laws.--
       ``(i) In general.--The staff of the Board shall be 
     appointed without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service, and, subject to clause (ii), shall be paid without 
     regard to the provisions of chapters 51 and 53 of such title 
     (relating to classification and schedule pay rates).
       ``(ii) Maximum rate.--In no case may the rate of 
     compensation determined under clause (i) exceed the rate of 
     basic pay payable for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code.
       ``(j) Authorization of Appropriations.--There are 
     authorized to be appropriated, out of the Federal 
     Supplemental Medical Insurance Trust Fund established under 
     section 1841, and the general fund of the Treasury, such sums 
     as are necessary to carry out the purposes of this 
     section.''.
       (b) Conforming References to Previous Part D.--
       (1) In general.--Any reference in law (in effect before the 
     date of enactment of this Act) to part D of title XVIII of 
     the Social Security Act is deemed a reference to part E of 
     such title (as in effect after such date).
       (2) Secretarial submission of legislative proposal.--Not 
     later than 6 months after the date of enactment of this 
     section, the Secretary of Health and Human Services shall 
     submit to the appropriate committees of Congress a 
     legislative proposal providing for such technical and 
     conforming amendments in the law as are required by the 
     provisions of this section.
       (c) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     take effect on the date of enactment of this Act.
       (2) Implementation.--Notwithstanding any provision of part 
     D of title XVIII of the Social Security Act (as added by 
     subsection (a)), the Secretary of Health and Human Services 
     shall implement the Voluntary Medicare Prescription Drug 
     Discount and Security Program established under such part in 
     a manner such that--
       (A) benefits under such part for eligible beneficiaries (as 
     defined in section 1860 of such Act, as added by such 
     subsection) with annual incomes below 200 percent of the 
     poverty line (as defined in such section) are available to 
     such beneficiaries not later than the date that is 6 months 
     after the date of enactment of this Act; and
       (B) benefits under such part for other eligible 
     beneficiaries are available to such beneficiaries not later 
     than the date that is 1 year after the date of enactment of 
     this Act.

     SEC. 3. ADMINISTRATION OF VOLUNTARY MEDICARE PRESCRIPTION 
                   DRUG DISCOUNT AND SECURITY PROGRAM.

       (a) Establishment of Center for Medicare Prescription 
     Drugs.--There is established, within the Centers for Medicare 
     & Medicaid Services of the Department of Health and Human 
     Services, a Center for Medicare Prescription Drugs. Such 
     Center shall be separate from the Center for Beneficiary 
     Choices, the Center for Medicare Management, and the Center 
     for Medicaid and State Operations.
       (b) Duties.--It shall be the duty of the Center for 
     Medicare Prescription Drugs to administer the Voluntary 
     Medicare Prescription Drug Discount and Security Program 
     established under part D of title XVIII of the Social 
     Security Act (as added by section 2).
       (c) Director.--
       (1) Appointment.--There shall be in the Center for Medicare 
     Prescription Drugs a Director of Medicare Prescription Drugs, 
     who shall be appointed by the President, by and with the 
     advice and consent of the Senate.
       (2) Responsibilities.--The Director shall be responsible 
     for the exercise of all powers and the discharge of all 
     duties of the Center for Medicare Prescription Drugs and 
     shall have authority and control over all personnel and 
     activities thereof.
       (d) Personnel.--The Director of the Center for Medicare 
     Prescription Drugs may appoint and terminate such personnel 
     as may be necessary to enable the Center for Medicare 
     Prescription Drugs to perform its duties.

     SEC. 4. EXCLUSION OF PART D COSTS FROM DETERMINATION OF PART 
                   B MONTHLY PREMIUM.

       Section 1839(g) of the Social Security Act (42 U.S.C. 
     1395r(g)) is amended--
       (1) by striking ``attributable to the application of 
     section'' and inserting ``attributable to--
       ``(1) the application of section'';
       (2) by striking the period and inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(2) the Voluntary Medicare Prescription Drug Discount and 
     Security Program under part D.''.

     SEC. 5. MEDIGAP REVISIONS.

       Section 1882 of the Social Security Act (42 U.S.C. 1395ss) 
     is amended by adding at the end the following new subsection:
       ``(v) Modernization of Medicare Supplemental Policies.--
       ``(1) Promulgation of model regulation.--
       ``(A) NAIC model regulation.--If, within 9 months after the 
     date of enactment of the Medicare Rx Drug Discount and 
     Security Act of 2003, the National Association of Insurance 
     Commissioners (in this subsection referred to as the `NAIC') 
     changes the 1991 NAIC Model Regulation (described in 
     subsection (p)) to revise the benefit package classified as 
     `J' under the standards established by subsection (p)(2) 
     (including the benefit package classified as `J' with a high 
     deductible feature, as described in subsection (p)(11)) so 
     that--

[[Page 8384]]

       ``(i) the coverage for prescription drugs available under 
     such benefit package is replaced with coverage for 
     prescription drugs that complements but does not duplicate 
     the benefits for prescription drugs that beneficiaries are 
     otherwise entitled to under this title;
       ``(ii) a uniform format is used in the policy with respect 
     to such revised benefits; and
       ``(iii) such revised standards meet any additional 
     requirements imposed by the Medicare Rx Drug Discount and 
     Security Act of 2003;

     subsection (g)(2)(A) shall be applied in each State, 
     effective for policies issued to policy holders on and after 
     January 1, 2005, as if the reference to the Model Regulation 
     adopted on June 6, 1979, were a reference to the 1991 NAIC 
     Model Regulation as changed under this subparagraph (such 
     changed regulation referred to in this section as the `2005 
     NAIC Model Regulation').
       ``(B) Regulation by the secretary.--If the NAIC does not 
     make the changes in the 1991 NAIC Model Regulation within the 
     9-month period specified in subparagraph (A), the Secretary 
     shall promulgate, not later than 9 months after the end of 
     such period, a regulation and subsection (g)(2)(A) shall be 
     applied in each State, effective for policies issued to 
     policy holders on and after January 1, 2005, as if the 
     reference to the Model Regulation adopted on June 6, 1979, 
     were a reference to the 1991 NAIC Model Regulation as changed 
     by the Secretary under this subparagraph (such changed 
     regulation referred to in this section as the `2005 Federal 
     Regulation').
       ``(C) Consultation with working group.--In promulgating 
     standards under this paragraph, the NAIC or Secretary shall 
     consult with a working group similar to the working group 
     described in subsection (p)(1)(D).
       ``(D) Modification of standards if medicare benefits 
     change.--If benefits under part D of this title are changed 
     and the Secretary determines, in consultation with the NAIC, 
     that changes in the 2005 NAIC Model Regulation or 2005 
     Federal Regulation are needed to reflect such changes, the 
     preceding provisions of this paragraph shall apply to the 
     modification of standards previously established in the same 
     manner as they applied to the original establishment of such 
     standards.
       ``(2) Construction of benefits in other medicare 
     supplemental policies.--Nothing in the benefit packages 
     classified as `A' through `I' under the standards established 
     by subsection (p)(2) (including the benefit package 
     classified as `F' with a high deductible feature, as 
     described in subsection (p)(11)) shall be construed as 
     providing coverage for benefits for which payment may be made 
     under part D.
       ``(3) Application of provisions and conforming 
     references.--
       ``(A) Application of provisions.--The provisions of 
     paragraphs (4) through (10) of subsection (p) shall apply 
     under this section, except that--
       ``(i) any reference to the model regulation applicable 
     under that subsection shall be deemed to be a reference to 
     the applicable 2005 NAIC Model Regulation or 2005 Federal 
     Regulation; and
       ``(ii) any reference to a date under such paragraphs of 
     subsection (p) shall be deemed to be a reference to the 
     appropriate date under this subsection.
       ``(B) Other references.--Any reference to a provision of 
     subsection (p) or a date applicable under such subsection 
     shall also be considered to be a reference to the appropriate 
     provision or date under this subsection.''.
                                 ______
                                 
      By Mr. JEFFORDS (for himself, Mr. Lautenberg, Mr. Graham of 
        Florida, and Mr. Lieberman):
  S. 779. A bill to amend the Federal Water Pollution Control Act to 
improve protection of treatment works from terrorist and other harmful 
and intentional acts, and for other purposes; to the Committee on 
Environment and Public Works.
  Mr. JEFFORDS. Mr. President, I rise today with Senators Lautenberg, 
Graham of Florida, and Lieberman to introduce the Wastewater Treatment 
Works Security and Safety Act. This legislation provides for the safety 
and security of our Nation's wastewater treatment works by providing 
needed funds to conduct vulnerability assessments and implement 
security improvements. In addition, this bill will ensure long-term 
safety and security by providing funds for researching innovative 
technologies and enhancing proven vulnerability assessment tools 
already in use.
  Since the terrible events of September 11, we have taken several 
comprehensive steps to protect our water supplies and infrastructure. I 
have spoken on the many initiatives taking place on the Committee on 
Environment and Public Works and at the Environmental Protection Agency 
to protect our Nation's critical water infrastructure. I am pleased to 
say that we have made some progress.
  EPA worked with State and local governments to expeditiously provide 
guidance on the protection of drinking water facilities from terrorist 
attacks. Based on the recommendations of Presidential Decision 
Directive 63, issued by President Clinton in 1998, the Environmental 
Protection Agency and its industry partner, the Association of 
Metropolitan Water Agencies, established a communications system, a 
water infrastructure Information Sharing and Analysis Center, designed 
to provide real-time threat assessment data to water utilities 
throughout the Nation.
  Last year, Senator Smith and I worked to include the authorization of 
$160 million for vulnerability assessments at drinking water facilities 
as part of the Public Health Security and Bioterrorism Preparedness and 
Response Act of 2002. Despite our hard work during the conference, we 
were unable to include a provision in that bill for wastewater 
facilities due to jurisdictional issues in the House.
  While these initial efforts are essential, our task is by no means 
finished. We cannot forget the vital importance of protecting our 
Nation's wastewater facilities. Everyday we take for granted the 
hundreds of thousand of miles of pipes buried underground and the 
thousands of wastewater treatment works that keep our water clean and 
safe. Like all our Nation's critical infrastructure, the disruption or 
destruction of these structures could have a devastating impact on 
public safety, health, and the economy.
  The legislation I am introducing today will take us one step further 
by authorizing support of ongoing efforts to develop and implement 
vulnerability assessments and emergency response plans at wastewater 
facilities.
  Using existing tools such as the Sandia Laboratory's vulnerability 
assessment tool or the Association of Metropolitan Sewerage 
Association's Vulnerability Self-Assessment Tool, treatment works will 
be able to securely identify critical areas of need. With the funds 
provided by this bill, EPA will also ensure that treatment works remedy 
areas of concerns. Using the results of the vulnerability assessment, 
treatment works will develop or revise emergency response plans to 
minimize damage if an attack were to occur.
  This bill authorizes $180 million for fiscal years 2004 through 2008 
for grants to conduct the vulnerability assessments and implement basic 
security enhancements. The bill also recognizes the need to address 
immediate and urgent security needs with a special $20 million 
authorization over 2004 and 2005.
  In my home State of Vermont, we have only three towns of over 25,000 
people. The small water facilities serving these communities have been 
particularly challenged to meet today's new homeland security 
challenges. Many times, water managers operate the town's water 
facilities as a part-time job or even as a free service. We must ensure 
that they are afforded the same consideration under this act as the 
medium and large facilities. This bill authorizes $15 million for 
grants to help small communities conduct vulnerability assessments, 
develop emergency response plans, and address potential threats to the 
treatment works. It also instructs the Administrator of the EPA to 
provide guidance to these communities on how to effectively use these 
security tools.
  To ensure the continued development of wastewater security 
technologies, the Wastewater Treatment Works Security and Safety Act 
authorizes $15 million for research for 2004 through 2008. It also 
provides $500,000 to refine vulnerability self-assessment tools already 
in existence.
  I look forward to working with my colleagues on this legislation and 
other efforts to enhance the security of our Nation's water 
infrastructure in the weeks, months, and years to come. We truly have 
something to protect--clean, safe, fresh water is worth our investment.
                                 ______
                                 
      By Mr. McCAIN:
  S. 784. A bill to revise the boundary of the Petrified Forest 
National Park

[[Page 8385]]

in the State of Arizona, and for other purposes; to the Committee on 
Energy and Natural Resources.
  Mr. McCAIN. Mr. President, I rise to introduce legislation to 
authorize expansion of the Petrified Forest National Park in Arizona. 
I'm pleased that Representative Rick Renzi will introduce companion 
legislation in the House of Representatives.
  The Petrified Forest National Park is a national treasure among the 
Nation's parks, renowned for its large concentration of highly colored 
petrified wood, fossilized remains, and spectacular landscapes. 
However, it is much more than a colorful, scenic vista, for the 
Petrified Forest has been referred to as ``one of the world's greatest 
storehouses of knowledge about life on earth when the Age of the 
Dinosaurs was just beginning.''
  For anyone whom has ever visited this park, one is quick to recognize 
the wealth of scenic, scientific, and historical values of this park. 
Preserved deposits of petrified wood and related fossils are among the 
most valuable representations of Triassic-period terrestrial ecosystems 
in the world. These natural formations were deposited more than 220 
million years ago. Scenic vistas, designated wilderness areas, and 
other historically significant sites of pictographs and Native American 
ruins are added dimensions to the park.
  The Petrified Forest was originally designated as a National Monument 
by former President Theodore Roosevelt in 1906 to protect the important 
natural and cultural resources of the Park, and later re-designated as 
a National Park in 1962. While several boundary adjustments were made 
to the Park, a significant portion of unprotected resources remain in 
outlying areas adjacent to the Park.
  A proposal to expand the Park's boundaries was recommended in the 
park's General Management Plan in 1992, in response to concerns about 
the long-term protection needs of globally significant resources and 
the Park's viewshed in nearby areas. For example, one of the most 
concentrated deposits of petrified wood is found within the Chinle 
escarpment, of which only thirty percent is included within the current 
Park boundaries.
  Increasing reports of theft and vandalism around the Park have 
activated the Park, local communities, and other interested entities to 
seek additional protections through a proposed boundary expansion. It 
has been estimated that visitors to the Park steal about 12 tons of 
petrified wood every year. Other reports of destruction to 
archaeological sites and gravesites have also been documented. Based on 
these continuing threats to resources intrinsic to the Park, the 
National Parks Conservation Association listed the Petrified Forest 
National Park on its list of Top Ten Most Endangered Parks in 2000.
  Support for this proposed boundary expansion is extraordinary, from 
the local community of Holbrook, scientific and research institutions, 
state tourism agencies, and environmental groups, such as the National 
Parks Conservation Association, NPCA. I ask unanimous consent that a 
letter of support from the National Parks Conservation Association be 
printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:
                                                    National Parks


                                     Conservation Association,

                                                   March 20, 2003.
     Hon. John McCain,
     U.S. Senate, Russell Senate Office Bldg.,
     Washington, DC.
       Dear Senator McCain: I wish to express the appreciation of 
     the National Parks Conservation Association (NPCA) for your 
     reintroduction of the Petrified Forest National Park 
     Expansion Act. Every day that passes without adequately 
     protecting the remarkable resources adjacent to this gem of 
     the National Park System places them and the park at greater 
     risk. NPCA strongly agrees with the National Park Service's 
     1992 findings that the park should be expanded. Now, with 
     your leadership and with private landowners within the 
     proposed expansion area anxious to sell their land, we 
     believe the time has come to pass this important legislation.
       It is hard to imagine a better example of an outdoor 
     classroom than Petrified Forest National Park. This boundary 
     expansion will ensure long-term protection of globally 
     significant paleontological resources outside the park, which 
     are believed even to surpass those within the present park 
     boundary. Only 30 percent of the 22-mile long Chinle 
     escarpment, known to constitute the best record of Triassic 
     period terrestrial ecosystems found anywhere in the world, is 
     protected within the park. The opportunities for 
     schoolchildren in Arizona and elsewhere, for the scientific 
     community, and others to learn from the 225 million-year old 
     record entombed in these lands is truly incredible. The 
     lessons locked within Petrified Forest and the proposed 
     expansion lands can give us important perspectives about how 
     modern day challenges like global warming and biodiversity 
     relate to historical changes in the earth's climate and 
     environment, dating back to prehistoric times. And they can 
     excite the next generation of scientists the nation will need 
     to compete in the 21st century.
       In addition to the Chinle, the expansion would protect 
     major ancestral puebloan archaeological sites dating as far 
     back as 7,000 years, and the incredible vista from the park's 
     Blue Mesa. It will also alleviate the threat of encroaching 
     incompatible development and will greatly enhance the 
     National Park Service's capability to protect the resources 
     from vandalism and illegal pothunting.
       I have had the opportunity to discuss this expansion 
     proposal with Arizona's new governor, Janet Napolitano and 
     her staff and am very encouraged by their strong interest. 
     NPCA looks forward to working with you, your able staff, the 
     Arizona delegation, the new governor, and the park service to 
     build upon the progress we made in last year's negotiations 
     on the bill.
       Expanding Petrified Forest National Park will be a gift the 
     American people will appreciate for generations to come. In 
     addition, I can think of no more fitting tribute to the 
     park's late superintendent, Michele Hellickson, than saving 
     the resource she fought to protect for so many years. Because 
     it provides such a compelling explanation about why this 
     expansion is so important, I am attaching an article by David 
     Gillette, the Colbert Curator of Paleontology at the Museum 
     of Northern Arizona, which was published in our magazine last 
     fall. Thank you for advancing this important proposal to 
     protect a truly remarkable resource for our nation and the 
     rest of the world.
           Sincerely,
                                                    Craig D. Obey,
                            Vice President for Government Affairs.

  The legislation I am introducing today is intended to serve as a 
placeholder bill for further development of a boundary expansion 
proposal. The legislation is identical to the version introduced in the 
107th Congress. Several key issues remain that require resolution, 
including the exact definition of the expanded boundary acreage as well 
as the disposition and possible acquisition of private and State lands 
within the proposed expansion area.
  It's encouraging to note that the four major landowners within the 
proposed boundary expansion area have expressed interest in the Park 
expansion. Other public landowners, primarily the state of Arizona and 
the Bureau of Land Management, have recognized the significance of the 
paleontological resources on its lands adjacent to the Park. The 
Arizona State Trust land Department closed nearby State trust lands to 
both surface and subsurface applications. Additionally, the Bureau of 
Land Management has identified its land-holdings within the proposed 
expansion area for disposal and possible transfer to the Park.
  Other issues involving additional private landholders and State trust 
land must still be resolved. In particular, the State of Arizona has 
specific requirements which must be addressed as the legislation moves 
through the process, particularly with regard to compensation to the 
state for any acquisitions of State trust lands by the Secretary of the 
Interior, in keeping with the requirements of State law.
  I fully intend to address these issues in consultation with affected 
entities and resolve any additional questions within a reasonable time-
frame. A historic opportunity exists to alleviate major threats to 
these nationally significant resources and preserve them for our 
posterity.
  On a personal note, I'd like to acknowledge the former Park 
Superintendent of Petrified Forest National Park, Michele Hellickson, 
who recently lost a battle with cancer a few months ago. She served as 
Park Superintendent for nine years, from 1993 to 2002, and was one of 
the most ardent supporters to protect the resources of this Park. Her 
commitment to protect this incredible Park will long be remembered and 
acknowledged.

[[Page 8386]]

  I look forward to working with my colleagues on both sides of the 
aisle to ensure swift consideration and enactment of this proposal. 
Time is of the essence to ensure the long-term protection of these rare 
and important resources for the enjoyment and educational value for 
future generations.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 784

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Petrified Forest National 
     Park Expansion Act of 2003''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) the Petrified Forest National Park was established--
       (A) to preserve and interpret the globally significant 
     paleontological resources of the Park that are generally 
     regarded as the most important record of the Triassic period 
     in natural history; and
       (B) to manage those resources to retain significant 
     cultural, natural, and scenic values;
       (2) significant paleontological, archaeological, and scenic 
     resources directly related to the resource values of the Park 
     are located in land areas adjacent to the boundaries of the 
     Park;
       (3) those resources not included within the boundaries of 
     the Park--
       (A) are vulnerable to theft and desecration; and
       (B) are disappearing at an alarming rate;
       (4) the general management plan for the Park includes a 
     recommendation to expand the boundaries of the Park and 
     incorporate additional globally significant paleontological 
     deposits in areas adjacent to the Park--
       (A) to further protect nationally significant 
     archaeological sites; and
       (B) to protect the scenic integrity of the landscape and 
     viewshed of the Park; and
       (5) a boundary adjustment at the Park will alleviate major 
     threats to those nationally significant resources.
       (b) Purpose.--The purpose of this Act is to authorize the 
     Secretary of the Interior to acquire 1 or more parcels of 
     land--
       (1) to expand the boundaries of the Park; and
       (2) to protect the rare paleontological and archaeological 
     resources of the Park.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Map.--The term ``map'' means the map entitled 
     ``Proposed Boundary Adjustments, Petrified Forest National 
     Park'', numbered __, and dated ____.
       (2) Park.--The term ``Park'' means the Petrified Forest 
     National Park in the State.
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (4) State.--The term ``State'' means the State of Arizona.

     SEC. 4. BOUNDARY REVISION.

       (a) In General.--The boundary of the Park is revised to 
     include approximately ___ acres, as generally depicted on the 
     map.
       (b) Availability of Map.--The map shall be on file and 
     available for public inspection in the appropriate offices of 
     the National Park Service.

     SEC. 5. ACQUISITION OF ADDITIONAL LAND.

       (a) Private Land.--The Secretary may acquire from a willing 
     seller, by purchase, exchange, or by donation, any private 
     land or interests in private land within the revised boundary 
     of the Park.
       (b) State Land.--
       (1) In general.--The Secretary may, with the consent of the 
     State and in accordance with State law, acquire from the 
     State any State land or interests in State land within the 
     revised boundary of the Park by purchase or exchange.
       (2) Plan.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary shall, in coordination 
     with the State, develop a plan for acquisition of State land 
     or interests in State land identified for inclusion within 
     the revised boundary of the Park.

     SEC. 6. ADMINISTRATION.

       (a) In General.--Subject to applicable laws, all land and 
     interests in land acquired under this Act shall be 
     administered by the Secretary as part of the Park.
       (b) Transfer of Jurisdiction.--The Secretary shall transfer 
     to the National Park Service administrative jurisdiction over 
     any land under the jurisdiction of the Secretary that--
       (1) is depicted on the map as being within the boundaries 
     of the Park; and
       (2) is not under the administrative jurisdiction of the 
     National Park Service on the date of enactment of this Act.
       (c) Grazing.--
       (1) In general.--The Secretary shall permit the 
     continuation of grazing on land transferred to the Secretary 
     under this Act, subject to applicable laws (including 
     regulations) and Executive orders.
       (2) Termination of leases or permits.--Nothing in this 
     subsection prohibits the Secretary from accepting the 
     voluntary termination of a grazing permit or grazing lease 
     within the Park.
       (d) Amendment to General Management Plan.--Not later than 3 
     years after the date of enactment of this Act, the Secretary 
     shall amend the general management plan for the Park to 
     address the use and management of any additional land 
     acquired under this Act.

     SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as are 
     necessary to carry out this Act.
                                 ______
                                 
      By Mr. BAUCUS (for himself, Mr. Grassley, Mr. Daschle, Mr. 
        Coleman, Mr. Harkin, Mr. Craig, Mr. Johnson, Mr. Burns, Mr. 
        Dorgan, Mr. Roberts, Mr. Dayton, Mr. Fitzgerald, Mrs. Lincoln, 
        Mr. Cochran, Mr. Hagel, Mr. Conrad, and Mr. Hatch):
  S. 785. A bill to amend the Internal Revenue Code of 1986 to allow 
the payment of dividends on the stock of cooperatives without reducing 
patronage dividends; to the Committee on Finance.
  Mr. BAUCUS. Mr. President, today I am introducing a very important 
piece of legislation to modify the cooperative dividend allocation 
rule. I would like to thank Senator Grassley and my other colleagues 
that have signed on the bill for their support for correcting this 
rule.
  America's agriculture industry has not had it easy in recent years. 
In Montana and other areas of the country, drought, low prices and the 
economic downturn have hit our farms and ranches hard. Over the past 
few years Congress has worked diligently to help our Nation's smaller 
agriculture producers. However, there is more work to be done.
  Senator Grassley and I recently introduced ``The Tax Empowerment and 
Relief for Farmers and Fisherman Act'', TERFF, with the intention of 
giving farmers the tools to help themselves. One provision within that 
Act deals with the payment of dividends on cooperatives' stock. Today 
we are introducing that provision on its own to emphasize the 
importance of changing the dividend allocation rule.
  Currently, the dividend allocation rule reduces patronage income when 
a cooperative pays a dividend on capital stock from non-patronage 
earnings. This reduces the amount cooperatives can pay back to their 
farmer patrons and inhibits their ability to equity-finance operations.
  Modifying this rule will make farmer cooperatives more competitive 
and provide better access to capital. This piece of legislation will 
help revitalize farmer cooperatives by providing more accurate tax 
treatment for patronage and non-patronage income.
  I look forward to working with my colleagues to enact the critical 
piece of legislation.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 785

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PAYMENT OF DIVIDENDS ON STOCK OF COOPERATIVES 
                   WITHOUT REDUCING PATRONAGE DIVIDENDS.

       (a) In General.--Subsection (a) of section 1388 of the 
     Internal Revenue Code of 1986 (relating to patronage dividend 
     defined) is amended by adding at the end the following new 
     sentence: ``For purposes of paragraph (3), net earnings shall 
     not be reduced by amounts paid during the year as dividends 
     on capital stock or other proprietary capital interests of 
     the organization to the extent that the articles of 
     incorporation or bylaws of such organization or other 
     contract with patrons provide that such dividends are in 
     addition to amounts otherwise payable to patrons which are 
     derived from business done with or for patrons during the 
     taxable year.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions in taxable years beginning after 
     the date of the enactment of this Act.

  Mr. GRASSLEY. Mr. President, the Dividend Allocation Rule, DAR, is 
the result of several old court cases and subsequent IRS interpretation 
that applies only to cooperatives which are

[[Page 8387]]

corporations. When a non cooperative corporation pays a dividend to its 
shareholder the corporation pays tax on the dividend issued and the 
shareholder pays a tax on the dividend received, so they pay two levels 
of taxation. In fact, under the President's dividend exclusion proposal 
as presented to the U.S. Congress, the President of the United States 
makes a compelling argument that being taxed twice is inherently unfair 
and it would be good for the Nation's economy that only one level of 
tax should be paid by the corporation and that the shareholder would 
receive the dividend tax free.
  Well--if two levels of taxation on corporations and their 
shareholders is unfair and adverse to the creation of capital and the 
economy--how would you like to try to operate as a fiscally sound 
business entity if you had to figure out every day how you were going 
to generate enough cash flow to pay THREE levels of taxation.
  Current law requires corporate cooperatives to treat income from 
their member-owners, patrons, separate from income of their non-members 
money. Contributions and earnings used by the cooperative to operate is 
typically called retained patronage. The member, unlike a shareholder, 
has to pay income tax on that amount even if the Cooperative retains 
the money for operation expenses. Then, because of the IRS' rules, when 
the Cooperative returns money to its non-members it loses its corporate 
deduction which in turn reduces the return of earnings that the patron 
has already paid taxes on--the result is a triple layer of tax. This 
rule is inherently unfair to our corporate cooperatives.
  Now is the time to finally correct this injustice. The Congress 
passed this bill in 106th Congress, but it was subsequently vetoed by 
the President. It was a part of a bill I sponsored the ``Tax 
Empowerment and Relief for Farmers and Fishermen, TERFF, Act'' in the 
107th, and now it is time for the Senate to pass it again in the 108th. 
As Chairman of the Finance Committee, I am proud to join with my 
Ranking Member Max Baucus to introduce the bill to repeal the Dividend 
Allocation Rule. We have been joined by many of our farm States' 
Senators in a truly bipartisan effort to correct this financial 
injustice.
  The time to act is now and this bi-partisan legislation will 
eliminate the adverse tax problem and will help rejuvenate over 100 of 
our farmer cooperative networks in Iowa and nearly 3000 of our 
cooperatives across the America.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Rockefeller, and Mr. Breaux):
  S. 786. A bill to amend the temporary assistance to needy families 
program under part A of title IV of the Social Security Act to provide 
grants for transitional jobs programs, and for other purposes; to the 
Committee on Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce the Business 
Links Act, on behalf of myself, Senator Rockefeller and Senator Breaux.
  The Business Links Act is a companion bill to the Education Works 
Act, which I introduced a short time ago. Both of these bills address 
the need to support State efforts to use welfare to work strategies 
that combine work with a flexible mix of education, training and other 
supports. The Business Links Act, more specifically, provides resources 
to States seeking to implement one of the most effective of these types 
of programs: transitional jobs programs. These programs provide 
subsidized, temporary, wage-paying jobs for 20 to 35 hours a week, 
along with access to job readiness, basic education, vocational skills, 
and other barrier-removal services based on individualized plans. The 
Business Links Act would provide states with funding to implement these 
transitional jobs programs and other training and support programs such 
as Business Links.
  Existing transitional jobs programs are achieving great outcomes. 
Research has shown that 81 percent to 94 percent of those who completed 
transitional jobs programs went on to unsubsidized jobs with wages, and 
that most of these individuals moved into full-time employment. 
Transitional jobs can be particularly effective for the hardest to 
serve welfare recipients. For people who face barriers, or who lack the 
skills or experience to compete successfully in the labor market, paid 
work in a supportive environment, together with access to needed 
services provides a real chance to move into stable, permanent 
employment. Transitional jobs not only help individuals, but 
communities as well. In providing work opportunities for hard-to-employ 
individuals, these programs reduce pressure on local emergency systems 
and decrease government expenditures on health care, food stamps, and 
cash assistance.
  Our legislation also supports ``business link'' programs that provide 
individuals with fewer barriers and those who have historically found 
only very low wage employment with intensive training and skill 
development activities designed to lead to long-term, higher paid 
employment. These programs are based on partnerships with the private 
sector. In my home State, just such a program is producing great 
results the Teamworks program. During a 12-week course, participants 
are provided with training in life and employment skills, necessary 
supports such as childcare and transportation, assistance in their job 
search efforts and ongoing support for 18 months after job placement. 
Impressively, the average wage of those completing the program is $1.50 
per hour higher than other programs and job retention rates are 20 
percent higher.
  Additional Federal support for transitional job and business link 
programs is sorely needed. The Welfare-to-work funds that have 
previously been used to support these programs are nearly exhausted. In 
addition, in a period of rising caseloads and state budget crises such 
as we are now facing, funding transitional jobs solely with existing 
TANF funds will be very difficult.
  I urge my colleagues to join me in supporting the Business Links Act, 
which will provide States with the tools they need to implement 
programs that work. I ask unanimous consent that the text of the bill 
be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 786

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Business Links Act of 
     2003''.

     SEC. 2. TRANSITIONAL JOBS GRANTS.

       (a) In General.--Section 403(a)(4) of the Social Security 
     Act (42 U.S.C. 603(a)(4)) is amended to read as follows:
       ``(4) Innovative business link partnership grants.--
       ``(A) In general.--The Secretary and the Secretary of Labor 
     (in this paragraph referred to as the ``Secretaries'') 
     jointly shall award grants in accordance with this paragraph 
     for projects proposed by eligible applicants based on the 
     following:
       ``(i) The potential effectiveness of the proposed project 
     in carrying out the activities described in subparagraph (E).
       ``(ii) Evidence of the ability of the eligible applicant to 
     leverage private, State, and local resources.
       ``(iii) Evidence of the ability of the eligible applicant 
     to coordinate with other organizations at the State and local 
     level.
       ``(B) Definition of eligible applicant.--
       ``(i) In general.--In this paragraph, the term `eligible 
     applicant' means a nonprofit organization, a local workforce 
     investment board established under section 117 of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2832), a State, a 
     political subdivision of a State, or an Indian tribe.
       ``(ii) Grants to promote business linkages.--

       ``(I) Additional eligible applicant.--Only for purposes of 
     grants to carry out the activities described in subparagraph 
     (E)(i), the term `eligible applicant' includes an employer.
       ``(II) Additional requirement.--In order to qualify as an 
     eligible applicant for purposes of subparagraph (E)(i), the 
     applicant must provide evidence that the application has been 
     developed by and will be implemented by a local or regional 
     consortium that includes, at minimum, employers or employer 
     associations, and education and training providers, in 
     consultation with local labor organizations and social 
     service providers that work with low-income families or 
     individuals with disabilities.

[[Page 8388]]

       ``(C) Requirements.--
       ``(i) In general.--In awarding grants under this paragraph, 
     the Secretaries shall--

       ``(I) consider the needs of rural areas and cities with 
     large concentrations of residents with an income that is less 
     than 150 percent of the poverty line; and
       ``(II) ensure that--

       ``(aa) all of the funds made available under this paragraph 
     (other than funds reserved for use by the Secretaries under 
     subparagraph (J)) shall be used for activities described in 
     subparagraph (E);
       ``(bb) not less than 40 percent of the funds made available 
     under this paragraph (other than funds so reserved) shall be 
     used for activities described in subparagraph (E)(i); and
       ``(cc) not less than 40 percent of the funds made available 
     under this paragraph (other than funds so reserved) shall be 
     used for the activities described in subparagraph (E)(ii).
       ``(ii) Continuation of availability.--If any portion of the 
     funds required to be used for activities referred to in item 
     (bb) or (cc) of clause (i)(II) are not awarded in a fiscal 
     year, such portion shall continue to be available in the 
     subsequent fiscal year for the same activity, in addition to 
     other amounts that may be available for such activities for 
     that subsequent fiscal year.
       ``(D) Determination of grant amount.--
       ``(i) In general.--Subject to clause (ii), in determining 
     the amount of a grant to be awarded under this paragraph for 
     a project proposed by an eligible applicant, the Secretaries 
     shall provide the eligible applicant with an amount 
     sufficient to ensure that the project has a reasonable 
     opportunity to be successful, taking into account--

       ``(I) the number and characteristics of the individuals to 
     be served by the project;
       ``(II) the level of unemployment in the area to be served 
     by the project;
       ``(III) the job opportunities and job growth in such area;
       ``(IV) the poverty rate for such area; and
       ``(V) such other factors as the Secretary deems appropriate 
     in such area.

       ``(ii) Maximum award for grants to promote business 
     linkages or provide transitional jobs programs.--

       ``(I) In general.--In the case of a grant to carry out 
     activities described in clause (i) or (ii) of subparagraph 
     (E), an eligible applicant awarded a grant under this 
     paragraph may not receive more than $10,000,000 per fiscal 
     year under the grant.
       ``(II) Rule of construction.--Nothing in subclause (I) 
     shall be construed as precluding an otherwise eligible 
     applicant from receiving separate grants to carry out 
     activities described in clause (i) or (ii) of subparagraph 
     (E).

       ``(iii) Grant period.--The period in which a grant awarded 
     under this paragraph may be used shall be specified for a 
     period of not less than 36 months and not more than 60 
     months.
       ``(E) Allowable activities.--An eligible applicant awarded 
     a grant under this paragraph shall use funds provided under 
     the grant to do the following:
       ``(i) Promote business linkages.--

       ``(I) In general.--To promote business linkages in which 
     funds shall be used to fund new or expanded programs that are 
     designed to--

       ``(aa) substantially increase the wages of eligible 
     individuals (as defined in subparagraph (F)), whether 
     employed or unemployed, who have limited English proficiency 
     or other barriers to employment by creating or upgrading job 
     and related skills in partnership with employers, especially 
     by providing supports and services at or near work sites; and
       ``(bb) identify and strengthen career pathways by expanding 
     and linking work and training opportunities for such 
     individuals in collaboration with employers.

       ``(II) Consideration of in-kind, in-cash resources.--In 
     determining which programs to fund under this clause, an 
     eligible applicant awarded a grant under this paragraph shall 
     consider the ability of a consortium to provide funds in-kind 
     or in-cash (including employer-provided, paid release time) 
     to help support the programs for which funding is sought.
       ``(III) Priority.--In determining which programs to fund 
     under this clause, an eligible applicant awarded a grant 
     under this paragraph shall give priority to programs that 
     include education or training for which participants receive 
     credit toward a recognized credential, such as an 
     occupational certificate or license.
       ``(IV) Use of funds.--

       ``(aa) In general.--Funds provided to a program under this 
     clause may be used for a comprehensive set of employment and 
     training benefits and services, including job development, 
     job matching, workplace supports and accommodations, 
     curricula development, wage subsidies, retention services, 
     and such other benefits or services as the program deems 
     necessary to achieve the overall objectives of this clause.
       ``(bb) Provision of services.--So long as a program is 
     principally designed to assist eligible individuals, (as 
     defined in subparagraph (F)), funds may be provided to a 
     program under this clause that also serves low-earning 
     employees of 1 or more employers even if such individuals are 
     not within the definition of eligible individual (as so 
     defined).
       ``(ii) Provide for transitional jobs programs.--

       ``(I) In general.--To provide for wage-paying transitional 
     jobs programs which combine time-limited employment in the 
     public or nonprofit private sector that is subsidized with 
     public funds with skill development and activities to remove 
     barriers to employment, pursuant to an individualized plan 
     (or, in the case of an eligible individual described in 
     subparagraph (F)(i), an individual responsibility plan 
     developed for an individual under section 408(b)). Such 
     programs also shall provide job development and placement 
     assistance to individual participants to help them move from 
     subsidized employment in transitional jobs into unsubsidized 
     employment, as well as retention services after the 
     transition to unsubsidized employment.
       ``(II) Eligible participants.--The Secretary shall ensure 
     that individuals who participate in transitional jobs 
     programs funded under a grant made under this paragraph shall 
     be individuals who have been unemployed because of limited 
     skills, experience, or other barriers to employment, and who 
     are eligible individuals (as defined in subparagraph (F)), 
     provided that so long as a program is designed to, and 
     principally serves, eligible individuals (as so defined), a 
     limited number of individuals who are unemployed because of 
     limited skills, experience, or other barriers to employment, 
     and who have an income below 100 percent of the Federal 
     poverty line but who do not satisfy the definition of 
     eligible individual (as so defined) may be served in the 
     program to the extent the Secretaries determine that the 
     inclusion of such individuals in the program is appropriate.
       ``(III) Use of funds.--Funds provided to a program under 
     this clause may only be used in accordance with the 
     following:

       ``(aa) To create subsidized transitional jobs in which work 
     shall be performed directly for the program operator or at 
     other public and non profit organizations (in this subclause 
     referred to as `worksite employers') in the community, and in 
     which 100 percent of the wages shall be subsidized, except as 
     described in item (ff) regarding placements in the private, 
     for profit sector.
       ``(bb) Participants shall be paid at the rate paid to 
     unsubsidized employees of the worksite employer who perform 
     comparable work at the worksite where the individual is 
     placed. If no other employees perform the same or comparable 
     work then wages shall be set, at a minimum, at 50 percent of 
     the Lower Living Standard Income Level (commonly referred to 
     as the `LLSIL'), as determined under section 101(24) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2801(24)), for a 
     family of 3 based on 35 hours per week.
       ``(cc) Transitional jobs shall be limited to not less than 
     6 months and not more than 24 months, however, nothing shall 
     preclude a participant from moving into unsubsidized 
     employment at a point prior to the maximum duration of the 
     transitional job placement. Participants shall be paid wages 
     based on a workweek of not less than 30 hours per week or 
     more than 40 hours per week, except that a parent of a child 
     under the age of 6, a child who is disabled, or a child with 
     other special needs, or an individual who for other reasons 
     cannot successfully participate for 30 to 40 hours per week, 
     may be allowed to participate for more limited hours, but not 
     less than 20 hours per week. In any work week, 50 percent to 
     80 percent of hours shall be spent in the transitional job 
     and 20 percent to 50 percent of hours shall be spent in 
     education or training, or other services designed to reduce 
     or eliminate any barriers.
       ``(dd) Program operators shall provide case management 
     services and ensure access to appropriate education, 
     training, and other services, including job accommodation, 
     work supports, and supported employment, as appropriate and 
     consistent with an individual plan that is based on the 
     individual's strengths, resources, priorities, concerns, 
     abilities, capabilities, career interests, and informed 
     choice and that is developed with each participant. The goal 
     of each participant's plan shall focus on preparation for 
     unsubsidized jobs in demand in the local economy which offer 
     the potential for advancement and growth. Services shall also 
     include job placement assistance and retention services, 
     which may include coaching and work place supports, for 12 
     months after entry into unsubsidized placement. Participants 
     shall also receive support services such as subsidized child 
     care and transportation, on the same basis as those services 
     are made available to recipients of assistance under the 
     State program funded under this part who are engaged in work-
     related activities.
       ``(ee) Providers shall work with individual recipients to 
     determine eligibility for other employment-related supports 
     which may include (but are not limited to) supported 
     employment, other vocational rehabilitation services, and 
     programs or services available under the Workforce Investment 
     Act of 1998 (29 U.S.C. 2801 et seq.), or the ticket to work 
     and self-sufficiency program established under section 1148, 
     and, to the extent possible, shall provide transitional 
     employment in collaboration with entities providing, or 
     arranging for the provision of, such other supports.
       ``(ff) Not more than 20 percent of the placements for a 
     grantee shall be with a private for-profit company, except 
     that such 20 percent limit may be waived by the Secretary

[[Page 8389]]

     for programs in rural areas when the grantee can demonstrate 
     insufficient public and non-profit worksites. When a 
     placement is made at a private for-profit company, the 
     company shall pay 50 percent of program costs (including 
     wages) for each participant, and the company shall agree, in 
     writing, to hire each participant into an unsubsidized 
     position at the completion of the agreed upon subsidized 
     placement, or sooner, provided that the participant's job 
     performance has been satisfactory. Not more than 5 percent of 
     the workforce of a private for-profit company may be composed 
     of transitional jobs participants.

       ``(IV) Definition of transitional jobs program.--In this 
     clause, the term `transitional jobs program' means a program 
     that is intended to serve current and former recipients of 
     assistance under a State or tribal program funded under this 
     part and other low-income individuals who have been unable to 
     secure employment through job search or other employment-
     related services because of limited skills, experience, or 
     other barriers to employment.

       ``(iii) Capitalization.--To develop capitalization 
     procedures for the delivery of self-sustainable social 
     services.
       ``(iv) Administrative expenditures.--Not more than 5 
     percent of the funds awarded to an eligible applicant under 
     this paragraph may be used for administrative expenditures 
     incurred in carrying out the activities described in clause 
     (i), (ii), or (iii) or for expenditures related to carrying 
     out the assessments and reports required under subparagraph 
     (H).
       ``(F) Definition of eligible individual.--In this 
     paragraph, the term `eligible individual' means--
       ``(i) an individual who is a parent who is a recipient of 
     assistance under a State or tribal program funded under this 
     part;
       ``(ii) an individual who is a parent who has ceased to 
     receive assistance under such a State or tribal program;
       ``(iii) an individual who is at risk of receiving 
     assistance under a State or tribal program funded under this 
     part;
       ``(iv) an individual with a disability; or
       ``(v) a noncustodial parent who is unemployed, or is having 
     difficulty in paying child support obligations, including 
     such a parent who is a former criminal offender.
       ``(G) Application.--Each eligible applicant desiring a 
     grant under this paragraph shall submit an application to the 
     Secretaries at such time, in such manner, and accompanied by 
     such information as the Secretaries may require.
       ``(H) Assessments and reports by grantees.--
       ``(i) In general.--An eligible applicant that receives a 
     grant under this paragraph shall assess and report on the 
     outcomes of programs funded under the grant, including the 
     identity of each program operator, demographic information 
     about each participant, including education level, literacy 
     level, prior work experience and identified barriers to 
     employment, the nature of education, training, or other 
     services received by the participant, the reason for the 
     participant's leaving the program, and outcomes related to 
     the placement of the participant in an unsubsidized job, 
     including 1-year employment retention, wage at placement, 
     benefits, and earnings progression, as specified by the 
     Secretaries.
       ``(ii) Assistance.--The Secretaries shall--

       ``(I) assist grantees in conducting the assessment required 
     under clause (i) by making available where practicable low-
     cost means of tracking the labor market outcomes of 
     participants; and
       ``(II) encourage States to provide such assistance.

       ``(I) Application to requirements of the state program.--
       ``(i) Work participation requirements.--With respect to any 
     month in which a recipient of assistance under a State or 
     tribal program funded under this part who satisfactorily 
     participates in a business linkage or transitional jobs 
     program described in subparagraph (E) that is paid for with 
     funds made available under a grant made under this paragraph, 
     such participation shall be considered to satisfy the work 
     participation requirements of section 407 and be included for 
     purposes of determining monthly participation rates under 
     subsection (b)(1)(B)(i) of that section.
       ``(ii) Participation not considered assistance.--A benefit 
     or service provided with funds made available under a grant 
     made under this paragraph shall not be considered assistance 
     for any purpose under a State or tribal program funded under 
     this part.
       ``(J) Assessments by the secretaries.--
       ``(i) Reservation of funds.--Of the amount appropriated 
     under subparagraph (L) for each of fiscal years 2004 and 
     2005, $3,000,000 of such amount for each such fiscal year is 
     reserved for use by the Secretaries to prepare an interim and 
     final report summarizing and synthesizing outcomes and 
     lessons learned from the programs funded through grants 
     awarded under this paragraph.
       ``(ii) Interim and final assessments.--With respect to the 
     reports prepared under clause (i), the Secretaries shall 
     submit--

       ``(I) the interim report not later than 4 years after the 
     date of enactment of the Business Links Act of 2003; and
       ``(II) the final report not later than 6 years after such 
     date of enactment.

       ``(K) Evaluations.--
       ``(i) Reservation of funds.--Of the amount appropriated 
     under subparagraph (L) for a fiscal year, an amount equal to 
     1.5 percent of such amount for each such fiscal year shall be 
     reserved for use by the Secretaries to conduct evaluations in 
     accordance with the requirements of clause (ii).
       ``(ii) Requirements.--The Secretaries--

       ``(I) shall develop a plan to evaluate the extent to which 
     programs funded under grants made under this paragraph have 
     been effective in promoting sustained, unsubsidized 
     employment for each group of eligible participants, and in 
     improving the skills and wages of participants in comparison 
     to the participants' skills and wages prior to participation 
     in the programs;
       ``(II) may evaluate the use of such a grant by a grantee, 
     as the Secretaries deem appropriate, in accordance with an 
     agreement entered into with the grantee after good-faith 
     negotiations; and
       ``(III) shall include, as appropriate, the following 
     outcome measures in the evaluation plan developed under 
     subclause (I):

       ``(aa) Placements in unsubsidized employment.
       ``(bb) Retention in unsubsidized employment 6 months and 12 
     months after initial placement.
       ``(cc) Earnings of individuals at the time of placement in 
     unsubsidized employment.
       ``(dd) Earnings of individuals 12 months after placement in 
     unsubsidized employment.
       ``(ee) The extent to which unsubsidized job placements 
     include access to affordable employer-sponsored health 
     insurance and paid leave benefits.
       ``(ff) Comparison of pre- and post-program wage rates of 
     participants.
       ``(gg) Comparison of pre- and post-program skill levels of 
     participants.
       ``(hh) Wage growth and employment retention in relation to 
     occupations and industries at initial placement in 
     unsubsidized employment and over the first 12 months after 
     initial placement.
       ``(ii) Recipient of cash assistance under the State program 
     funded under this part.
       ``(jj) Average expenditures per participant.
       ``(iii) Reports to congress.--The Secretaries shall submit 
     to Congress the following reports on the evaluations of 
     programs funded under grants made under this paragraph:

       ``(I) Interim report.--An interim report not later than 4 
     years after the date of enactment of the Business Links Act 
     of 2003.
       ``(II) Final report.--A final report not later than 6 years 
     after such date of enactment.

       ``(L) Appropriation.--
       ``(i) In general.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there is 
     appropriated for grants under this section, $200,000,000 for 
     each of fiscal years 2004 through 2008.
       ``(ii) Availability.--Amounts appropriated under clause (i) 
     for a fiscal year shall remain available for obligation for 5 
     fiscal years after the fiscal year in which the amount is 
     appropriated.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on October 1, 2003.
                                 ______
                                 
      By Mr. LEAHY (for himself and Mr. Kerry):
  S. 787. A bill to provide for the fair treatment of the Federal 
judiciary relating to compensation and benefits, and to instill greater 
public confidence in the Federal courts; to the Committee on the 
Judiciary.
  Mr. LEAHY. Mr. President, Senator Kerry and I are pleased to 
introduce the ``Fair and Independent Judiciary Act of 2003.'' This 
legislation arises from our belief that we must remain steadfast in our 
commitment to preserving the vitality of our third branch of 
government. Ensuring a fair and independent judiciary is critical to 
preserving the system of checks and balances established in our 
Constitution. The Fair and Independent Judiciary Act includes measures 
to respond to the shortfall in real judicial compensation, to repeal 
the link of judicial pay to congressional pay, to improve survivorship 
benefits, and to instill greater public confidence in our courts.
  The National Commission on Public Service, a blue-ribbon panel of 
experts headed by Paul Volcker, recently concluded that Congress' 
budgetary treatment of this co-equal branch threatens its ability to 
perform its essential mission. This legislation addresses a problem 
that the Chief Justice has repeatedly brought to our attention--the 
decline in real judicial salaries.
  As a member of both the Senate Judiciary Committee and the 
Appropriations Subcommittee on Commerce, Justice, State and the 
Judiciary, I have worked hard to help preserve a fair and independent 
judiciary. I was very disappointed that the Continuing Resolutions 
approved by Congress

[[Page 8390]]

failed to give the Federal judiciary a cost-of-living adjustment, COLA, 
for fiscal year 2003.
  Earlier this year, Senator Hatch and I were joined by Senator DeWine 
and Senator Specter to cosponsor legislation in the Senate to provide 
the Federal judiciary with a COLA for the present fiscal year. House 
Judiciary Chairman Sensenbrenner was joined by that Committee's Ranking 
Democratic Member, Congressman Conyers, and others to introduce 
identical legislation. Congress eventually passed a measure to give the 
Judiciary their cost of living adjustment for fiscal year 2003 but this 
effort failed to compensate the judiciary for many other previously 
skipped COLAs.
  The Fair and Independent Judiciary Act would correct the earlier 
failures to provide COLAs and prevent this situation from happening 
again.
  It is important to put our budgetary treatment of this co-equal 
branch in historical context. In 1975, Congress enacted the Executive 
Salary Cost-of-Living Adjustment Act, intended to give judges, Members 
of Congress and other high-ranking Executive Branch officials automatic 
COLAs as accorded other Federal employees unless rejected by Congress. 
In 1981, Congress enacted Section 140 of Public Law 97-92, mandating 
specific congressional action to give COLAs to judges.
  Five times in the last decade Congress failed to provide the 
Judiciary with a COLA. We believe that this treatment was unfair to the 
judiciary and that we should restore their salaries to what they would 
be had the COLAs been granted. In order to have their salaries reflect 
the current cost of living we should unlink the salaries of Members of 
Congress and Members of the Judiciary by repealing Section 140.
  In their thorough report, the Volcker Commission recommended that 
Congress unlink judicial salaries from those of Members of Congress. 
The Commission explained that due to ``the reluctance of members of 
Congress to risk the disapproval of their constituents . . . Congress 
has regularly permitted salaries to fall substantially behind cost-of-
living increases.'' Urgent Business for America: Revitalizing the 
Federal Government for the 21st Century, January 2003, Recommendation 
10. Therefore, the Commission found that ``executive and judicial 
salaries must be determined by procedures that tie them to the needs of 
the government, not the career-related political exigencies of members 
of Congress.''
  The Fair and Independent Judiciary Act would restore the skipped cost 
of living adjustments that occurred in 1995, 1996, 1997, 1999 and 2002 
so that the salaries of our judges and justices are not outpaced by 
inflation.
  Chief Justice Rehnquist has called judicial pay ``the most pressing 
issue'' facing the courts.
  We look forward to Senate consideration of the Fair and Independent 
Judiciary Act to restore previously skipped cost of living adjustments 
for the Justices and judges of the United States. We hope we can all 
work together to preserve the vitality of our third branch of 
government and to instill even greater confidence in our federal 
courts.
  I ask unanimous consent that the January 6, 2003 editorial from the 
Washington Post, and the text of the bill be printed in the Record.
  There being no objection, the bill and additional material was 
ordered to be printed in the Record, as follows:

                         Mr. Rehnquist's Pleas

       Chief Justice William H. Rehnquist made two pleas in his 
     year-end report. Neither is much of a surprise, because on 
     both judicial salaries and the process by which judges get 
     nominated and confirmed Mr. Rehnquist has spoken before. Yet 
     familiarity should not obscure the importance of the 
     subjects. The chief justice is correct, and the failure year 
     after year of the political branches to remedy the problems 
     of which he complains is harmful.
       Mr. Rehnquist once again stressed that the need to increase 
     judicial salaries is ``the most pressing issue'' facing the 
     courts. There is something demeaning about the chief justice 
     of the United States having to beg for the same cost-of-
     living adjustments for judges that other federal employees 
     get as a matter of course. Congress's frequent failure in 
     recent years to increase judicial compensation contravenes 
     the promise it made in 1989, when it banned judges from 
     making outside income and promised regular raises in 
     exchange. Between 1969 and 2000, according to one study, real 
     salaries for lower-court judges declined by 25 percent. And 
     while judges got a raise last year, this year's cost-of-
     living increase is, Mr. Rehnquist notes, very much in doubt.
       The problem is that Congress has irrationally linked 
     judicial pay to the salaries of members of Congress, who face 
     a political problem whenever they seek to jack up their own 
     paychecks. The judges end up hostage to congressional 
     cowardice. This disparity between their salaries and other 
     lawyer compensation is enormous and growing. This encourages 
     judges to leave the bench, and provides a substantial 
     disincentive for first-rate people to become federal judges 
     in the first place.
       Mr. Rehnquist also gave a timely reminder that the judicial 
     nominations process needs work. The chief justice is one of 
     the few people who has advocated for a reasonable process 
     irrespective of which party controls the presidency or the 
     Senate. So Mr. Rehnquist speaks with unusual moral authority 
     on this subject. And while he notes approvingly the 100 
     judges the 107th Congress confirmed, he warns that the 
     problem has not gone away. Having unified government may 
     temporarily ease the vacancy problem, he writes, but `there 
     will come a time when [unified government] is not the case, 
     and the judiciary will again suffer the delays of a drawn-out 
     confirmation process.'' Mr. Rehnquist rightly urged that the 
     political branches use this respite to ``fix the underlying 
     problems that have bogged down the . . . process for so many 
     years.'' On both pay and nominations, one can only wonder how 
     many more years the chief justice will have to repeat himself 
     before reason prevails.

                                 S. 787

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair and Independent Federal 
     Judiciary Act of 2003''.

     SEC. 2. SALARY ADJUSTMENTS.

       (a) Restoration of Statutory Cost-of-Living Adjustments.--
     The annual salaries for justices and judges are the 
     following:
       (1) Chief Justice of the Supreme Court, $211,300.
       (2) Associate Justices of the Supreme Court, $202,100.
       (3) Judges, Court of Appeals, $174,600.
       (4) Judges, Court of Military Appeals, $174,600.
       (5) Judges, District Court, $164,700.
       (6) Judges, Court of Federal Claims, $164,700.
       (7) Judges, Court of International Trade, $164,700.
       (8) Judges, Tax Court, $164,700.
       (9) Judges, Bankruptcy, $151,524.
       (b) Effective Date.--This section shall take effect on the 
     first day of the first applicable pay period beginning on or 
     after the date of enactment of this Act.

     SEC. 3. REPEAL OF ANNUAL CONGRESSIONAL AUTHORIZATION FOR COST 
                   OF LIVING ADJUSTMENT.

       Section 140 of Public Law 97-92 (28 U.S.C. 461 note) is 
     repealed.

     SEC. 4. SURVIVOR BENEFITS UNDER JUDICIAL SYSTEM AND OTHER 
                   SYSTEMS.

       (a) Creditable Years of Service.--Section 376 of title 28, 
     United States Code, is amended--
       (1) in subsection (k)(3), by striking the colon through 
     ``this section''; and
       (2) in subsection (r), by striking the colon through 
     ``other annuity''.
       (b) Notification Period for Survivor Annuity Coverage.--
       (1) In general.--Section 376 (a)(1) of title 28, United 
     States Code, is amended in the matter following subparagraph 
     (G) by striking ``six months'' and inserting ``1 year''.
       (2) Effective date.--This subsection shall take effect on 
     the date of enactment of this Act and apply only to written 
     notifications received by the Director of the Administrative 
     Office of the United States Courts after the dates described 
     under clause (i) or (ii) in the matter following subparagraph 
     (G) of section 376 (a)(1) of title 28, United States Code.

     SEC. 5. CITIZENS' COMMISSION ON PUBLIC SERVICE AND 
                   COMPENSATION.

       (a) Appointments.--
       (1) In general.--Not later than 60 days after the date of 
     enactment of this Act, the President shall appoint members to 
     the Citizens' Commission on Public Service and Compensation 
     under section 225 of the Federal Salary Act of 1967 (2 U.S.C. 
     351 et seq.).
       (2) Membership.--Section 225(b) of the Federal Salary Act 
     of 1967 (2 U.S.C. 352) is amended--
       (A) by striking paragraph (1) and inserting the following:
       ``(1) The Commission shall be composed of 11 members, who 
     shall be appointed from private life by the President. No 
     more than 6 members of the Commission may be affiliated with 
     the same political party.'';
       (B) by striking paragraph (4); and
       (C) by redesignating paragraphs (5) through (8) as 
     paragraphs (4) through (7), respectively.
       (3) Quadrennial application.--Section 225(b)(8)(B) of the 
     Federal Salary Act of 1967

[[Page 8391]]

     (2 U.S.C. 352(8)(B)), is amended in the first sentence by 
     striking ``1993'' each place that term appears and inserting 
     ``2006'' in each such place.
       (b) Report.--The Citizens' Commission on Public Service and 
     Compensation shall prepare a report in accordance with 
     section 225 of the Federal Salary Act of 1967 (2 U.S.C. 351 
     et seq.) with respect to fiscal year 2003 and every fourth 
     fiscal year thereafter.

     SEC. 6. JUDICIAL EDUCATION FUND.

       (a) Establishment.--Chapter 42 of title 28, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 630. Judicial Education Fund

       ``(a) In this section, the term--
       ``(1) `institution of higher education' has the meaning 
     given under section 101(a) of the Higher Education Act of 
     1965 (20 U.S.C. 1001(a));
       ``(2) `private judicial seminar'--
       ``(A) means a seminar, symposia, panel discussion, course, 
     or a similar event that provides continuing legal education 
     to judges; and
       ``(B) does not include--
       ``(i) seminars that last 1 day or less and are conducted 
     by, and on the campus of, an institute of higher education;
       ``(ii) seminars that last 1 day or less and are conducted 
     by national bar associations or State or local bar 
     associations for the benefit of the bar association 
     membership; or
       ``(iii) seminars of any length conducted by, and on the 
     campus of an institute of higher education or by national bar 
     associations or State or local bar associations, where a 
     judge is a presenter and at which judges constitute less than 
     25 percent of the participants;
       ``(3) `national bar association' means a national 
     organization that is open to general membership to all 
     members of the bar; and
       ``(4) `State or local bar association' means a State or 
     local organization that is open to general membership to all 
     members of the bar in the specified geographic region.
       ``(b) There is established within the United States 
     Treasury a fund to be known as the `Judicial Education Fund' 
     (in this section referred to as the `Fund').
       ``(c) Amounts in the Fund may be made available for the 
     payment of necessary expenses, including reasonable 
     expenditures for transportation, food, lodging, private 
     judicial seminar fees and materials, incurred by a judge or 
     justice in attending a private judicial seminar approved by 
     the Board of the Federal Judicial Center. Necessary expenses 
     shall not include expenditures for recreational activities or 
     entertainment other than that provided to all attendees as an 
     integral part of the private judicial seminar. Any payment 
     from the Fund shall be approved by the Board.
       ``(d) The Board may approve a private judicial seminar 
     after submission of information by the sponsor of that 
     private judicial seminar that includes--
       ``(1) the content of the private judicial seminar 
     (including a list of presenters, topics, and course 
     materials); and
       ``(2) the litigation activities of the sponsor and the 
     presenters at the private judicial seminar (including the 
     litigation activities of the employer of each presenter) on 
     the topic related to those addressed at the private judicial 
     seminar.
       ``(e) If the Board approves a private judicial seminar, the 
     Board shall make the information submitted under subsection 
     (d) relating to the private judicial seminar available to 
     judges and the public by posting the information on the 
     Internet.
       ``(f) The Judicial Conference shall promulgate guidelines 
     to ensure that the Board only approves private judicial 
     seminars that are conducted in a manner so as to maintain the 
     public's confidence in an unbiased and fair-minded judiciary.
       ``(g) There are authorized to be appropriated for deposit 
     in the Fund $2,000,000 for each of fiscal years 2003, 2004, 
     and 2005, to remain available until expended.''.
       (b) Technical and Conforming Amendment.--The table of 
     sections for chapter 42 of title 28, United States Code, is 
     amended by adding at the end the following:

``630. Judicial Education Fund.''.

     SEC. 7. PRIVATE JUDICIAL SEMINAR GIFTS PROHIBITED.

       (a) Definitions.--In this section, the term--
       (1) ``institution of higher education'' has the meaning 
     given under section 101(a) of the Higher Education Act of 
     1965 (20 U.S.C. 1001(a));
       (2) ``private judicial seminar''--
       (A) means a seminar, symposia, panel discussion, course, or 
     a similar event that provides continuing legal education to 
     judges; and
       (B) does not include--
       (i) seminars that last 1 day or less and are conducted by, 
     and on the campus of, an institute of higher education;
       (ii) seminars that last 1 day or less and are conducted by 
     national bar associations or State or local bar associations 
     for the benefit of the bar association membership; or
       (iii) seminars of any length conducted by, and on the 
     campus of an institute of higher education or by national bar 
     associations or State or local bar associations, where a 
     judge is a presenter and at which judges constitute less than 
     25 percent of the participants.
       (3) ``national bar association'' means a national 
     organization that is open to general membership to all 
     members of the bar; and
       (4) ``State or local bar association'' means a State or 
     local organization that is open to general membership to all 
     members of the bar in the specified geographic region.
       (b) In General.--Not later than 240 days after the date of 
     enactment of this Act, the Judicial Conference of the United 
     States shall promulgate regulations to apply section 7353(a) 
     of title 5, United States Code, to prohibit the solicitation 
     or acceptance of anything of value in connection with a 
     private judicial seminar.
       (c) Exception.--The prohibition under the regulations 
     promulgated under subsection (b) shall not apply if--
       (1) the judge participates in a private judicial seminar as 
     a speaker, panel participant, or otherwise presents 
     information;
       (2) Federal judges are not the primary audience at the 
     private judicial seminar; and
       (3) the thing of value accepted is--
       (A) reimbursement from the private judicial seminar sponsor 
     of reasonable transportation, food, or lodging expenses on 
     any day on which the judge speaks, participates, or presents 
     information, as applicable;
       (B) attendance at the private judicial seminar on any day 
     on which the judge speaks, participates, or presents 
     information, as applicable; or
       (C) anything excluded from the definition of a gift under 
     regulations of the Judicial Conference of the United States 
     under sections 7351 and 7353 of title 5, United States Code, 
     as in effect on the date of enactment of this Act.

     SEC. 8. RECUSAL LISTS.

       Section 455 of title 28, United States Code, is amended by 
     adding at the end the following:
       ``(g)(1) Each justice, judge, and magistrate of the United 
     States shall maintain a list of all financial interests that 
     would require disqualification under subsection (b)(4).
       ``(2) Each list maintained under paragraph (1) shall be 
     made available to the public at the office of the clerk for 
     the court at which a justice, judge, or magistrate is 
     assigned.''.

     SEC. 9. AVOIDING IMPROPRIETY AND THE APPEARANCE OF 
                   IMPROPRIETY IN ALL ACTIVITIES.

       In accordance with the Code of Conduct for United States 
     Judges, a judge must avoid all impropriety and appearance of 
     impropriety. The prohibition against behaving with 
     impropriety applies to both the professional and personal 
     conduct of a judge. Therefore, a judge should not hold 
     membership in any organization, except for religious or 
     fraternal organizations, that practices discrimination on the 
     basis of race, gender, religion, or national origin.
                                 ______
                                 
      By Mr. HOLLINGS (for himself, Mr. Brownback, Mr. Rockefeller, Mr. 
        Inouye, Ms. Cantwell, and Mr. Kerry):
  S. 788. A bill to enable the United States to maintain its leadership 
in aeronautics and aviation; to the Committee on Commerce, Science, and 
Transportation.
  Mr. HOLLINGS. Mr. President, I rise today to address a crucial issue 
that is affecting our competitiveness in the world economy. Since that 
first flight in 1903 when the Wright brothers took off on our great 
journey, the United States has piloted the course of aerospace and 
aviation technology development. Now that leading role is being 
threatened. The European Union has embarked on an ambitious plan to 
dominate the industry that historically we have led. Last year, for the 
first time, Airbus surpassed Boeing, by grabbing 54 percent of the 
market share in terms of aircraft units.
  Air travel is critical to our competitiveness in the global economy. 
The movement of passengers and goods throughout our nation feeds 
American business and keeps us close to our families and friends. The 
impact of civil aviation on the U.S. economy exceeds $900 billion a 
year, which is 9 percent of the Gross National Product. In terms of 
jobs, civil aviation employs 11 million Americans. We can not sit idle 
as this important industry is threatened.
  To compete we must have the most advanced and safest technology; yet 
the Air Traffic Management System in the United States is still reliant 
on ground-based technology that was developed over 30 years ago. 
Congress, FAA, NASA and the aviation industry must work together to 
update this system to accommodate future aviation demand and to take 
advantage of satellite navigation and advances in aircraft avionics. 
Historically upgrades to air traffic management have been slow and 
often come in over budget. We

[[Page 8392]]

must focus on creating the next generation of air traffic management 
technology in a more efficient and effective manner that will enhance 
safety and increase capacity.
  Aerospace and aviation advancement are also dependent upon a well-
trained and skilled workforce. According to the Commission Report on 
Aerospace, 26 percent of the science, engineering and manufacturing 
workforce will be eligible to retire in the next five years. New 
entrants to the aerospace industry are at a historical low as the 
number of layoffs have increased. In order to maintain our dominance in 
aerospace, we must continue to foster a qualified workforce.
  Our international competitors have been persistent in providing 
government support to aerospace research and aeronautical advancement. 
The subsidies offered by our foreign competitors, hinder the U.S. 
companies that often bear the majority of the burden for research and 
development. In order to give our companies a competitive advantage and 
to ensure that advances in aviation and aerospace technology continue, 
Congress must invest ample resources in fundamental aeronautical 
research. The President's FY 04 budget proposal cuts investment in FAA 
and NASA research, engineering and development. This will only hasten 
our descent in this industry. During this time of competing interests 
for the Federal dollar we cannot be too quick to divest ourselves from 
needed research that will renew our aviation business and maintain our 
global dominance.
  To turn an idea into a product, the process is often tedious and 
long. NASA and FAA must promote technological advancement and enable 
American industry to bring their products to market. Collaboration with 
government and industry is critical to ensure that research efforts 
lead to viable products that will enhance our aerospace and aviation 
industry.
  As we reflect on the last 100 years of advancement in the aviation 
and aerospace fields we cannot help to be proud of our accomplishments. 
But, we cannot afford to be content with those successes. We must look 
higher, faster, and farther than we have before--that is the American 
prerogative. And so with the help of my colleagues Senators Brownback, 
Rockefeller, Inouye, Cantwell and Kerry, I have crafted legislation to 
increase aeronautical research, nurture our industry's workforce, and 
ensure a collaborative partnership between government and private 
industry with the goal of ensuring the ``Second Century of Flight'' is 
as exciting and awe inspiring as the first.
                                 ______
                                 
      By Mr. NELSON of Florida (for himself and Mrs. Boxer):
  S. 789. A bill to change the requirements for naturalization through 
service in the Armed Forces of the United States; to the Committee on 
the Judiciary.
  Mr. NELSON of Florida. Mr. President, I rise on behalf of myself and 
Mrs. Boxer to introduce the Citizenship for Service Members Act of 
2003. This legislation reduces the waiting period for service members 
during peace time from 3 years to 2 years, waives all fees related to 
naturalization, and allows for naturalization proceedings to occur 
overseas.
  Everyday now we see our young men and women fighting and dying in 
Iraq and Afghanistan to protect freedom and democracy. One of the 
strengths of our military has always been its diversity. From the birth 
of our Nation, our military has attracted people from all walks of life 
including people who have immigrated to the United States to pursue 
freedom, prosperity, and security.
  Young men and women join the military in the hopes of achieving a 
better life while serving our country in the most difficult and 
honorable way. These young people enjoy various benefits for 
volunteering to protect American citizens such as assistance with 
college tuition, a secure and rewarding career in the military, and for 
some, the hope of gaining American citizenship.
  Non-citizens fighting in our military side by side with American 
citizens is a tradition that dates back to the Civil War, when recently 
arrived Irish immigrants fought for the Union. After World Wars I and 
II over 140,000 legal permanent resident participants gained 
citizenship. Currently there are 3,400 legal permanent residents in the 
Marines alone who have been deployed overseas. Further, Miami, FL and 
Los Angeles, CA contribute the second and third highest number of legal 
permanent residents to the military.
  Under current law, in the absence of an Executive Order eliminating 
the time of service requirement altogether, men and women may apply for 
citizenship after completing three years of service. This legislation 
would shorten that period to 2 years making it more likely that the 
service member will gain citizenship prior to finishing his first 
enlistment. Additionally, this legislation waives all fees related to 
naturalization eliminating a possible financial barrier. Finally, this 
bill allows for service members to complete the naturalization process 
overseas eliminating the sometimes unnecessarily lengthy and expensive 
trips back to the United States.
  Citizenship is a momentous honor and the ultimate goal of nearly 
every person who immigrates to the United States. Naturalization is 
especially critical to the thousands of young men and women who are 
placing their lives at risk every day to defend the citizens and ideals 
of the United States. These men and women desire citizenship so that 
they can become a recognized member of the country that they have 
chosen to defend.
  In addition, citizenship confers certain benefits upon servicemen and 
women. For example, while a legal permanent resident may enlist in the 
United States military, he or she is barred from becoming a 
commissioned officer, obtaining positions that require security 
clearances, becoming a part of any aircrews or rising to the level of 
special operations.
  We continue to see the great sacrifices these young men and women 
make on a daily basis. There is no greater show of patriotism than to 
join our armed forces and fight under the American flag. Over 30,000 
men and women from countries ranging from Canada to Japan to Cuba have 
volunteered to put their lives on the line to defend the United States. 
We owe it to these brave men and women to help them obtain the 
citizenship they have clearly earned.
  I ask unanimous consent that the text of this legislation be printed 
in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 789

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Citizenship for 
     Servicemembers Act of 2003''.

     SEC. 2. REQUIREMENTS FOR NATURALIZATION THROUGH SERVICE IN 
                   THE ARMED FORCES OF THE UNITED STATES.

       (a) Reduction of Period for Required Service.--Section 
     328(a) of the Immigration and Nationality Act (8 U.S.C. 
     1439(a)) is amended by striking ``three years'' and inserting 
     ``2 years''.
       (b) Prohibition on Imposition of Fees Relating to 
     Naturalization.--Title III of the Immigration and Nationality 
     Act (8 U.S.C. 301 et seq.) is amended--
       (1) in section 328(b)--
       (A) in paragraph (3)--
       (i) by striking ``honorable. The'' and inserting 
     ``honorable (the''; and
       (ii) by striking ``discharge.'' and inserting ``discharge); 
     and''; and
       (B) by adding at the end the following:
       ``(4) notwithstanding any other provision of law, no fee 
     shall be charged or collected from the applicant for filing a 
     petition for naturalization or for the issuance of a 
     certificate of naturalization upon citizenship being granted 
     to the applicant, and no clerk of any State court shall 
     charge or collect any fee for such services unless the laws 
     of the State require such charge to be made, in which case 
     nothing more than the portion of the fee required to be paid 
     to the State shall be charged or collected.''; and
       (2) in section 329(b)--
       (A) in paragraph (2), by striking ``and'' at the end;
       (B) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(4) notwithstanding any other provision of law, no fee 
     shall be charged or collected from the applicant for filing a 
     petition for

[[Page 8393]]

     naturalization or for the issuance of a certificate of 
     naturalization upon citizenship being granted to the 
     applicant, and no clerk of any State court shall charge or 
     collect any fee for such services unless the laws of the 
     State require such charge to be made, in which case nothing 
     more than the portion of the fee required to be paid to the 
     State shall be charged or collected.''.
       (c) Naturalization Proceedings Overseas for Members of the 
     Armed Forces.--Notwithstanding any other provision of law, 
     the Secretary of Homeland Security, the Secretary of State, 
     and the Secretary of Defense shall ensure that any 
     applications, interviews, filings, oaths, ceremonies, or 
     other proceedings under title III of the Immigration and 
     Nationality Act (8 U.S.C. 301 et seq.) relating to 
     naturalization of members of the Armed Forces are available 
     through United States embassies, consulates, and as 
     practicable, United States military installations overseas.
       (d) Technical and Conforming Amendment.--Section 328(b)(3) 
     of the Immigration and Nationality Act (8 U.S.C. 1439(b)(3)) 
     is amended by striking ``Attorney General'' and inserting 
     ``Secretary of Homeland Security''.
                                 ______
                                 
      By Mr. LUGAR:
  S. 790. A bill to authorize appropriations for the Department of 
State for fiscal years 2004 and 2005, to authorize appropriations under 
the Arms Export Control Act and the Foreign Assistance Act of 1961 for 
security assistance for fiscal years 2004 and 2005, and for other 
purposes; to the Committee on Foreign Relations.
  Mr. LUGAR. Mr. President, by request, I introduce for appropriate 
reference a bill entitled the Foreign Relations Authorization Act, 
Fiscal Years 2004 and 2005.
  This proposed legislation has been requested by the Department of 
State and I am introducing it in order that there may be a specific 
bill to which Members of the Senate and the public may direct their 
attention and comments.
  I reserve my right to support or oppose this bill, as well as to make 
any suggested amendments to it, when the matter is considered by the 
Committee on Foreign Relations.
  I ask unanimous consent that the bill be printed in the Record, 
together with a section-by-section analysis of the bill and the letter 
from the Assistant Secretary of State for Legislative Affairs dated 
April 2, 2003.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Foreign Relations 
     Authorization Act, Fiscal Years 2004 and 2005.''

     SEC. 2. ORGANIZATION OF ACT INTO TITLES; TABLE OF CONTENTS.

       (a) Titles.--This Act is organized into eight Titles as 
     follows:
TITLE I--AUTHORIZATION OF APPROPRIATIONS
TITLE II--DEPARTMENT OF STATE AUTHORITIES AND ACTIVITIES
TITLE III--ORGANIZATION AND PERSONNEL OF THE DEPARTMENT OF STATE
TITLE IV--INTERNATIONAL ORGANIZATIONS
TITLE V--SUPPORTING THE WAR ON TERRORISM
TITLE VI--SECURITY ASSISTANCE
TITLE VII--INTERNATIONAL PARENTAL CHILD ABDUCTION PREVENTION ACT OF 
              2003
TITLE VIII--MISCELLANEOUS PROVISIONS

            Subtitle A--Streamlining Reporting Requirements

                       Subtitle B--Other Matters

       (b) The table of contents for this Act is as follows:
Sec. 1. Short Title
Sec. 2. Organization of Act into Titles; Table of Contents

                TITLE I--AUTHORIZATION OF APPROPRIATIONS

Sec. 101. Administration of Foreign Affairs
Sec. 102. International Organizations and Conferences
Sec. 103. International Commissions
Sec. 104. Migration and Refugee Assistance
Sec. 105. Centers and Foundations

        TITLE II--DEPARTMENT OF STATE AUTHORITIES AND ACTIVITIES

Sec. 201. Reimbursement Rate for Airlift Services Provided to the 
              Department of State
Sec. 202. Grant Authority to Promote Biotechnology
Sec. 203. Immediate Response Facilities
Sec. 204. Mine Action Programs Grant Authority
Sec. 205. The U.S. Diplomacy Center
Sec. 206. Public Affairs Grant Authority

    TITLE III--ORGANIZATION AND PERSONNEL OF THE DEPARTMENT OF STATE

Sec. 301. Cost of Living Allowances
Sec. 302. Waiver of Annuity Limitations on Re-Employed Foreign Service 
              Annuitants
Sec. 303. Fellowship of Hope Program
Sec. 304. Claims for Lost Pay
Sec. 305. Suspension or Enforced Leave
Sec. 306. Home Leave
Sec. 307. Ombudsman for the Department of State
Sec. 308. Repeal of Recertification Requirement for Senior Foreign 
              Service

                 TITLE IV--INTERNATIONAL ORGANIZATIONS

Sec. 401. Raising the Cap on Peacekeeping Contributions

                TITLE V--SUPPORTING THE WAR ON TERRORISM

Sec. 501. Designation of Foreign Terrorist Organizations

                     TITLE VI--SECURITY ASSISTANCE

Sec. 601. Restrictions on Economic Support Funds for Lebanon
Sec. 602. Thresholds for Congressional Notification of FMS and 
              Commercial Arms Transfers
Sec. 603. Bilateral Agreement Requirements Relating to Licensing of 
              Defense Exports
Sec. 604. Authorization of Appropriations--Foreign Military Financing, 
              International Military Education and Training, and 
              Nonproliferation, Anti-Terrorism, Demining, and Related 
              Programs
Sec. 605. Cooperative Threat Reduction Permanent Waiver
Sec. 606. Congressional Notification for Comprehensive Defense Export 
              Authorizations
Sec. 607. Expansion of Authorities for Loan of Material, Supplies, and 
              Equipment for Research and Development Purposes
Sec. 608. Establish Dollar Threshold for Congressional Notification of 
              Excess Defense Articles that are Significant Military 
              Equipment
Sec. 609. Waiver of Net Proceeds Resulting from Disposal of U.S. 
              Defense Articles Provided to a Foreign Country on a Grant 
              Basis
Sec. 610. Transfer of Certain Obsolete or Surplus Defense Articles in 
              the War Reserve Stockpiles for Allies to Israel
Sec. 611. Additions to U.S. War Reserve Stockpiles for Allies
Sec. 612. Provision of Cataloging Data and Services
Sec. 613. Provision to Exercise Waivers with Respect to Pakistan

  TITLE VII--INTERNATIONAL PARENTAL CHILD ABDUCTION PREVENTION ACT OF 
                                  2003

Sec. 701. Short Title
Sec. 702. Inadmissibility of Aliens Supporting International Child 
              Abductors and Relatives of Such Abductors

                  TITLE VIII--MISCELLANEOUS PROVISIONS

Sec. 801. Reports on Benchmarks for Bosnia
Sec. 802. Report Concerning the German Foundation ``Remembrance, 
              Responsibility, and the Future''
Sec. 803. Report on Progress in Cyprus
Sec. 804. Reports on Activities in Colombia
Sec. 805. Report on Extradition of Narcotics Traffickers
Sec. 806. Report on Terrorist Activity in Which United States Citizens 
              Were Killed and Related Matters
Sec. 807. Report and Waiver Regarding Embassy in Jerusalem
Sec. 808. Report on Progress toward Regional Nonproliferation
Sec. 809. Report on Annual Estimate and Justification for Sales Program
Sec. 810. Report on Foreign Military Training
Sec. 811. Report on Human Rights Violations by IMET Participants
Sec. 812. Report on Development of the European Security and Defense 
              Identity (ESDI) Within the NATO Alliance
Sec. 813. Report on Transfers of Military Sensitive Technology to 
              Countries and Entities of Concern
Sec. 814. Nuclear Reprocessing Transfer Waiver
Sec. 815. Complex Foreign Contingencies

                TITLE I--AUTHORIZATION OF APPROPRIATIONS

     SEC. 101. ADMINISTRATION OF FOREIGN AFFAIRS.

       The following amounts are authorized to be appropriated for 
     the Department of State under ``Administration of Foreign 
     Affairs'' to carry out the authorities, functions, duties, 
     and responsibilities in the conduct of foreign affairs of the 
     United States and for other purposes authorized by law:
       (1) Diplomatic and consular programs.--For ``Diplomatic and 
     Consular Programs'' of the Department of State $4,163,544,000 
     for the fiscal year 2004, and such sums as may be necessary 
     for the fiscal year 2005.
       (A) Worldwide security upgrades.--Of the amounts authorized 
     to be appropriated by subparagraph (1), $646,701,000 for the 
     fiscal

[[Page 8394]]

     year 2004, and such sums as may be necessary for the fiscal 
     year 2005 are authorized to be appropriated only for 
     worldwide security upgrades.
       (2) Capital investment fund.--For ``Capital Investment 
     Fund'' of the Department of State, $157,000,000 for the 
     fiscal year 2004, and such sums as may be necessary for the 
     fiscal year 2005.
       (3) Embassy security, construction and maintenance.--For 
     ``Embassy Security, Construction and Maintenance,'' 
     $1,514,400,000 for the fiscal year 2004, and such sums as may 
     be necessary for fiscal year 2005.
       (4) Educational and cultural exchange programs.--For 
     ``Educational and Cultural Exchange Programs,'' $345,346,000 
     for the fiscal year 2004, and such sums as may be necessary 
     for fiscal year 2005.
       (5) Representation allowances.--For ``Representation 
     Allowances,'' $9,000,000 for the fiscal year 2004, and such 
     sums as may be necessary for fiscal year 2005.
       (6) Protection of foreign missions and officials.--For 
     ``Protection of Foreign Missions and Officials,'' $10,000,000 
     for the fiscal year 2004 and such sums as may be necessary 
     for the fiscal year 2005.
       (7) Emergencies in the diplomatic and consular service.--
     For ``Emergencies in the Diplomatic and Consular Service,'' 
     $1,000,000 for the fiscal year 2004, and such sums as may be 
     necessary for the fiscal year 2005.
       (8) Repatriation loans.--For ``Repatriation Loans,'' 
     $1,219,000 for the fiscal year 2004, and such sums as may be 
     necessary for the fiscal year 2005.
       (9) Payment to the american institute in taiwan.--For 
     ``Payment to the American Institute in Taiwan,'' $19,773,000 
     for the fiscal year 2004, and such sums as may be necessary 
     for fiscal year 2005.
       (10) Office of the inspector general.--For ``Office of the 
     Inspector General,'' $31,703,000 for the fiscal year 2004, 
     and such sums as may be necessary for the fiscal year 2005.

     SEC. 102. INTERNATIONAL ORGANIZATIONS AND CONFERENCES.

       (a) Assessed Contributions To International 
     Organizations.--There are authorized to be appropriated for 
     ``Contributions to International Organizations,'' 
     $1,010,463,000 for the fiscal year 2004 and such sums as may 
     be necessary for the fiscal year 2005, for the Department of 
     State to carry out the authorities, functions, duties, and 
     responsibilities in the conduct of the foreign affairs of the 
     United States with respect to international organizations and 
     to carry out other authorities in law consistent with such 
     purposes.
       (b) Contributions For International Peacekeeping 
     Activities.--There are authorized to be appropriated for 
     ``Contributions for International Peacekeeping Activities,'' 
     $550,200,000 for the fiscal year 2004, and such sums as may 
     be necessary for the fiscal year 2005, for the Department of 
     State to carry out the authorities, functions, duties, and 
     responsibilities of the United States with respect to 
     international peacekeeping activities and to carry out other 
     authorities in law consistent with such purposes. Funds 
     appropriated pursuant to this paragraph are authorized to be 
     available until expended.
       (c) Foreign Currency Exchange Rates.--In addition to 
     amounts authorized to be appropriated by subsection (a), 
     there are authorized to be appropriated such sums as may be 
     necessary for each of the fiscal years 2004 and 2005 to 
     offset adverse fluctuations in foreign currency exchange 
     rates. Amounts appropriated under this subsection shall be 
     available for obligation and expenditure only to the extent 
     that the Director of the Office of Management and Budget 
     determines and certifies to Congress that such amounts are 
     necessary due to such fluctuations.

     SEC. 103. INTERNATIONAL COMMISSIONS.

       The following amounts are authorized to be appropriated 
     under ``International Commissions'' for the Department of 
     State to carry out the authorities, functions, duties, and 
     responsibilities in the conduct of the foreign affairs of the 
     United States and for other purposes authorized by law:
       (a) International Boundary and Water Commission, United 
     States and Mexico.--For ``International Boundary and Water 
     Commission, United States and Mexico''--
       (1) for ``Salaries and Expenses,'' $31,562,000 for the 
     fiscal year 2004, and such sums as may be necessary for the 
     fiscal year 2005; and
       (2) for ``Construction,'' $8,901,000 for the fiscal year 
     2004, and such sums as may be necessary for the fiscal year 
     2005;
       (b) International Boundary Commission, United States and 
     Canada.--For ``International Boundary Commission, United 
     States and Canada,'' $1,261,000 for the fiscal year 2004 and 
     such sums as may be necessary for the fiscal year 2005.
       (c) International Joint Commission.--For ``International 
     Joint Commission,'' $7,810,000 for the fiscal year 2004 and 
     such sums as may be necessary for the fiscal year 2005.
       (d) International Fisheries Commissions.--For 
     ``International Fisheries Commissions,'' $20,043,000 for the 
     fiscal year 2004 and such sums as may be necessary for the 
     fiscal year 2005.

     SEC. 104. MIGRATION AND REFUGEE ASSISTANCE.

       There are authorized to be appropriated for ``Migration and 
     Refugee Assistance'' for authorized activities $760,197,000 
     for the fiscal year 2004 and such sums as may be necessary 
     for the fiscal year 2005.

     SEC. 105. CENTERS AND FOUNDATIONS.

       (a) Asia Foundation.--There are authorized to be 
     appropriated for ``The Asia Foundation'' for authorized 
     activities, $9,250,000 for the fiscal year 2004 and such sums 
     as may be necessary for the fiscal year 2005.
       (b) National Endowment for Democracy.--There are authorized 
     to be appropriated for the ``National Endowment for 
     Democracy'' for authorized activities, $36,000,000 for the 
     fiscal year 2004 and such sums as may be necessary for the 
     fiscal year 2005.
       (c) Center for Cultural and Technical Interchange Between 
     East and West.--There are authorized to be appropriated for 
     the ``Center for Cultural and Technical Interchange Between 
     East and West'' for authorized activities, $14,280,000 for 
     the fiscal year 2004 and such sums as may be necessary for 
     the fiscal year 2005.

        TITLE II--DEPARTMENT OF STATE AUTHORITIES AND ACTIVITIES

     SEC. 201. REIMBURSEMENT RATE FOR AIRLIFT SERVICES PROVIDED TO 
                   THE DEPARTMENT OF STATE.

       Section 2642(a) of Title 10 (10 U.S.C. 2642(a)) is amended 
     by inserting ``or the Department of State'' after ``Central 
     Intelligence Agency''.

     SEC. 202. GRANT AUTHORITY TO PROMOTE BIOTECHNOLOGY.

     The Secretary of State is authorized to support, by grants, 
     cooperative agreements or contract, outreach and public 
     diplomacy activities regarding the benefits of agricultural 
     biotechnology, science-based regulatory systems, and the 
     application of the technology for trade and development. 
     Except as otherwise specifically authorized, the total amount 
     of grants made in any one fiscal year pursuant to this 
     authority shall not exceed $500,000.

     SEC. 203. IMMEDIATE RESPONSE FACILITIES.

       (a) Section 604(b) of the Secure Embassy Construction and 
     Counterterrorism Act of 1999 (P.L. 106-113, 22 U.S.C. 4865 
     note) is amended by:
       (1) redesignating subsection (b)(1) as ``(b)(1)(A)'' and by 
     redesignating subsection (b)(2) as ``(b)(1)(B)''; and
       (2) by deleting the period after the words ``set forth in 
     section 606'' at the end of subsection (b), and adding the 
     following: ``; or
       ``(2) providing facilities to support immediate response 
     efforts in times of emergency.''
       (b) The Foreign Service Buildings Act of 1926 (P.L. 69-186, 
     22 U.S.C. 292 et seq.) is amended by adding the following new 
     section at the end:
       ``Sec. 13. Of the amounts appropriated to carry out the 
     Foreign Service Buildings Act of 1926 and the Secure Embassy 
     Construction and Counterterrorism Act 10 of 1999, not to 
     exceed $15,000,000 in any fiscal year may be made available 
     to provide immediate response diplomatic facilities through a 
     reprogramming of funds, notwithstanding any advance 
     congressional notification requirements contained in any 
     other law. In the case of any such reprogramming that would 
     otherwise be subject to a requirement of advance 
     congressional notification, notification to the Committee on 
     Foreign Relations and the Committee on Appropriations of the 
     Senate and the Committee on International Relations and the 
     Committee on Appropriations of the House of Representatives 
     shall be provided as soon as practicable, but not later than 
     3 days after the obligation or expenditure of such funds and 
     shall contain an explanation of the circumstances requiring 
     the deployment of immediate response facilities.''

     SEC. 204. MINE ACTION PROGRAMS GRANT AUTHORITY.

       The Secretary of State is authorized to support public-
     private partnerships for mine action programs by grant, 
     cooperative agreement, or contract. Except as otherwise 
     specifically authorized, the total amount of grants made in 
     any one fiscal year pursuant to this authority shall not 
     exceed $450,000.

     SEC. 205. THE U.S. DIPLOMACY CENTER.

       Title I of the State Department Basic Authorities Act of 
     1956 (22 U.S.C. 2651a et. seq.) is amended by adding the 
     following new section:

     ``SEC. 59. THE U.S. DIPLOMACY CENTER.

       ``(a) Activities.--
       ``(1) The Secretary of State is authorized to provide--by 
     contract, grant or otherwise--for appropriate museum visitor 
     and educational outreach services, including but not limited 
     to, organizing conference activities, museum shop, and food 
     services, in the public exhibit and related space utilized by 
     the U.S. Diplomacy Center (``USDC'') program.
       ``(2) The Secretary of State may pay all reasonable 
     expenses of conference activities conducted by the USDC, 
     including refreshments and travel of participants.
       ``(3) Any revenues generated under the authority of 
     paragraph (1) for visitor services may be retained and 
     credited to any appropriate Department of State appropriation 
     to recover the costs of operating the USDC.
       ``(b) Disposition of USDC Artifacts and Materials.--
       ``(1) All historic documents, artifacts or other articles 
     permanently acquired by the

[[Page 8395]]

     Department of State and determined by the Secretary of State 
     to be suitable for display in the USDC shall be considered to 
     be the property of the Secretary in his or her official 
     capacity and shall be subject to disposition solely in 
     accordance with this subsection.
       ``(2) Sale or Trade--Whenever the Secretary of State or 
     his/her designee determines that--
       ``(A) any item covered by paragraph (1) no longer serves to 
     further the purposes of the USDC as established in the 
     Collections Management Policy, or
       ``(B) in order to maintain the standards of the collections 
     of the USDC, a better use of that article would be its sale 
     or exchange,

     ``the Secretary may sell the item at fair market value, 
     trade, or transfer it, without regard to the requirements of 
     the Federal Property and Administrative Services Act of 1949. 
     The proceeds of any such sale may be used solely for the 
     advancement of the USDC's mission; in no event shall proceeds 
     be used for anything other than acquisition or direct care of 
     collections.
       ``(3) Loans--The Secretary of State may also lend items 
     covered by paragraph (1), when not needed for use or display 
     in the USDC, to the Smithsonian Institution or a similar 
     institution for repair, study, or exhibition.''
       (c) Except as may be identified subject to reprogramming 
     procedures, the Bureau of Public Affairs may not expend more 
     than $950,000 for fiscal year 2004, and such sums as may be 
     necessary for fiscal year 2005, for the U.S. Diplomacy 
     Center.

     SEC. 206. PUBLIC AFFAIRS GRANT AUTHORITY.

       To the extent that the Secretary of State is otherwise 
     authorized by law to provide for public affairs activities, 
     the Secretary may do so by grant, cooperative agreement, or 
     contract.

    TITLE III--ORGANIZATION AND PERSONNEL OF THE DEPARTMENT OF STATE

     SEC. 301. COST OF LIVING ALLOWANCES.

       Section 5924 of Title 5, United States Code, is amended as 
     follows:
       (a) by revising section (4)(A) to read as follows:
       ``(A) An allowance not to exceed the cost of obtaining such 
     kindergarten, elementary and secondary educational services 
     as are ordinarily provided without charge by the public 
     schools in the United States (including activities required 
     for successful completion of a grade or course and such 
     educational services as are provided by the States under the 
     Individuals with Disabilities Education Act), plus in those 
     cases when adequate schools are not available at the post of 
     the employee, board and room, and periodic transportation 
     between that post and the school chosen by the employee, not 
     to exceed the total cost to the Government of the dependent 
     attending an adequate school in the nearest United States 
     locality where an adequate school is available, without 
     regard to section 3324(a) and (b) of title 31. When travel 
     from school to post is infeasible, travel may be allowed 
     between the school attended and the home of a designated 
     relative or family friend or to join a parent at any 
     location, with the allowable travel expense not to exceed the 
     cost of travel between the school and post. The amount of the 
     allowance granted shall be determined on the basis of the 
     educational facility used.''
       (b) by revising section (4)(B) to read as follows:
       ``(B) The travel expenses of dependents of an employee to 
     and from a secondary, post-secondary or post-baccalaureate 
     educational institution, not to exceed one annual trip each 
     way for each dependent. An allowance payment under 
     subparagraph (A) of this paragraph (4) may not be made for a 
     dependent during the 12 months following his arrival at the 
     selected educational institution under authority contained in 
     this subparagraph (B).'', and
       (c) by inserting a new section 4(C) as follows:
       ``(C) Allowances provided pursuant to subparagraphs (A) and 
     (B) above may include, at the election of the employee and in 
     lieu of transportation thereof, payment or reimbursement of 
     the costs incurred to store the baggage at or in the vicinity 
     of the school during the dependent's annual trip between the 
     school and the employee's duty station, provided that such 
     payment or reimbursement may not exceed the cost that the 
     Government would incur to transport the baggage with the 
     dependent in connection with the annual trip.''

     SEC. 302. WAIVER OF ANNUITY LIMITATIONS ON RE-EMPLOYED 
                   FOREIGN SERVICE ANNUITANTS.

       (a) Section 824(g) of the Foreign Service Act of 1980 (22 
     U.S.C. 4064(g)) is amended to read as follows:
       ``(g) The Secretary may waive the application of paragraphs 
     (a) through (d) of this section, on a case by case basis, for 
     an annuitant re-employed on a temporary basis--
       (i) if, and for so long as, the authority is necessary due 
     to an emergency involving a direct threat to life or property 
     or other unusual circumstances; or
       (ii) in positions for which there is exceptional difficulty 
     in recruiting or retaining a qualified employee.''
       (b) Effective October 1, 2005, section 824(g), as amended 
     by this section, is further amended to read as follows:
       ``(g) The Secretary may waive the application of paragraphs 
     (a) through (d) of this section, on a case by case basis, for 
     an annuitant re-employed on a temporary basis, but only if, 
     and for so long as, the authority is necessary due to an 
     emergency involving a direct threat to life or property or 
     other unusual circumstances.''

     SEC. 303. FELLOWSHIP OF HOPE PROGRAM.

       The Secretary of State is authorized to establish the 
     Fellowship of Hope program under which employees of the 
     governments of designated countries may be assigned to an 
     office of profit or trust in the Department of State and 
     continue to receive salary and other benefits from those 
     governments, in exchange for assignments of a member of the 
     Foreign Service to the governments of the designated foreign 
     countries. The Secretary of State shall administer this 
     program in a manner consistent with the national security and 
     foreign policy interests of the United States, in 
     consultation with the Attorney General and the Director of 
     Central Intelligence.

     SEC. 304. CLAIMS FOR LOST PAY.

       Section 2 of the State Department Basic Authorities Act (22 
     U.S.C. 2669) is amended by adding a new subsection (o) as 
     follows:
       ``(o) make administrative corrections or adjustments to an 
     employee's pay, allowances, or differentials, resulting from 
     mistakes or retroactive personnel actions, as well as provide 
     back pay and other categories of payments under the Back Pay 
     Act as part of the settlement or compromise of administrative 
     claims or grievances filed against the Department.''

     SEC. 305. SUSPENSION OR ENFORCED LEAVE.

       (a) Notwithstanding any other provision of law, and pending 
     final resolution of the matter, the Secretary may suspend a 
     member of the Foreign Service without pay, or place the 
     member on enforced leave without pay,
       (1) where there is an investigation regarding the 
     revocation of an employee's security clearance or a 
     suspension of an employee's security clearance; or
       (2) where there is reasonable cause to believe a member has 
     committed a crime for which a sentence of imprisonment may be 
     imposed and there is a nexus to the efficiency of the 
     Service; or
       (3) for such other cause as will promote the efficiency of 
     the service;
       (b) Any member suspended or placed on enforced leave 
     pursuant to subsection (a) shall be entitled to--
       (1) at least 30 days advance written notice of the specific 
     reasons for such suspension, unless there is reasonable cause 
     to believe the employee has committed a crime for which a 
     sentence of imprisonment may be imposed;
       (2) a reasonable time, not less than seven days, to answer 
     orally and in writing;
       (3) be represented by an attorney or other representative; 
     and
       (4) a final written decision.
       (c) Any member suspended or placed on enforced leave 
     pursuant to this section shall be entitled to grieve such 
     action in accordance with procedures applicable to grievances 
     under chapter 11 of this Act. The review by the Foreign 
     Service Grievance Board with respect to such a grievance 
     shall be limited:

         (1) in the case of an action pursuant to subparagraph

       (a)(1) only to a determination whether the procedures set 
     forth in subsection (b) were followed, and
       (2) in the case of an action pursuant to subparagraph 
     (a)(2), only to a determination of whether the reasonable 
     cause requirements have been fulfilled and whether there is a 
     nexus between the conduct and the efficiency of the Service; 
     and
       (3) in the case of a suspension pursuant to subparagraph 
     (a)(3), only to a determination whether the action promotes 
     the efficiency of the service.
       (4) In no case regarding an appeal pursuant to this section 
     may the Foreign Service Grievance Board order prescriptive 
     relief.

     SEC. 306. HOME LEAVE.

       (a) Section 901(6) of the Foreign Service Act (22 U.S.C. 
     4081(6)) is amended by striking ``unbroken by home leave'' 
     wherever that phrase occurs.
       (b) Section 903(a) of the Foreign Service Act (22 U.S.C. 
     4083) is amended by striking ``18 months'' and inserting ``12 
     months.''

     SEC. 307. OMBUDSMAN FOR THE DEPARTMENT OF STATE.

       (a) There is established in the Office of the Secretary of 
     State the position of Ombudsman. The Ombudsman shall report 
     directly to the Secretary of State.
       (b) At the discretion of the Secretary of State, the 
     Ombudsman shall participate in meetings regarding the 
     management of the Department in order to assure that all 
     employees may contribute to the achievement of the 
     Department's responsibilities and to promote the career 
     interests of all employees.
       (c) Conforming Amendment.--Subsection (c) of section 172 of 
     the Foreign Relations Authorization Act, Fiscal Years 1988 
     and 1989 (as codified in 22 U.S.C. 2664a(c)) is deleted, and 
     subsection (d) renumbered accordingly.

     SEC. 308. REPEAL OF RECERTIFICATION REQUIREMENT FOR SENIOR 
                   FOREIGN SERVICE.

       Section 305(d) of the Foreign Service Act of 1980 (22 
     U.S.C. 3945(d)) is hereby repealed.

[[Page 8396]]



                 TITLE IV--INTERNATIONAL ORGANIZATIONS

     SEC. 401. RAISING THE CAP ON PEACEKEEPING CONTRIBUTIONS.

       (a) In General.--Section 404 of the Foreign Relations 
     Authorization Act, Fiscal Years 1994 and 1995 (Public Law 
     103-236) is amended by amending subparagraph (B), added by 
     Section 402 of P.L. 107-228 (FY 2003 Foreign Relations 
     Authorization Act), to amend subparagraph (iv) as follows and 
     add subparagraph (v) at the end:
       ``(iv) For assessments made during calendar year 2004, 27.1 
     percent.
       ``(v) For assessments made during calendar year 2005, 27.1 
     percent.''

                TITLE V--SUPPORTING THE WAR ON TERRORISM

     SEC. 501. DESIGNATION OF FOREIGN TERRORIST ORGANIZATIONS.

       Section 219 of the Immigration and Nationality Act (8 
     U.S.C. 1189) is amended as follows:
       (a) Duration of Designation.--
       (1) In subparagraph 219(a)(4)(A), by striking the words 
     ``Subject to paragraphs (5) and (6), a'' and adding ``A'' and 
     by striking the words ``for a period of 2 years beginning on 
     the effective date of the designation under paragraph 
     (2)(B)'' and adding ``until revoked under paragraphs (5) or 
     (6) or set aside pursuant to subparagraph (c)'' in lieu 
     thereof;
       (2) by revising subparagraph 219(a)(4)(B) to read as 
     follows:
       ``(B) Review of designation upon petition.--
       ``(i) In general.--The Secretary shall review the 
     designation of a foreign terrorist organization under the 
     procedures set forth in (ii)-(iii) if the designated 
     organization files a petition for revocation within the 
     petition period. If the organization has not previously filed 
     a petition for revocation under this subparagraph, the 
     petition period begins once two years have elapsed from the 
     date of designation. If the designated organization has 
     previously filed a petition under this subparagraph, then the 
     petition period begins once two years have elapsed from the 
     date of its last petition.
       ``(ii) Procedures.--Any foreign terrorist organization that 
     submits a petition under this subparagraph must provide 
     evidence in that petition that the relevant circumstances 
     described in paragraph (1) no longer exist with respect to 
     the organization.
       ``(iii) The Secretary shall complete his or her review of 
     any petition from a designated organization that is filed 
     within the petition 20 period and shall make a determination 
     concerning revocation of the designation within 180 days 
     after receiving the petition. The Secretary may consider 
     classified information in making a determination in response 
     to a petition. Classified information shall not be subject to 
     disclosure for such time as it remains classified, except 
     that such information may be disclosed to a court ex parte 
     and in camera for purposes of judicial review under 
     subsection (c). A determination under this clause shall be 
     published in the Federal Register, and any revocation under 
     this subparagraph shall be made under the procedures set 
     forth in paragraph (6).
       (3) by adding a new subparagraph 219(a)(4)(C) to read as 
     follows:
       ``(C) Other review of designation.--
       ``(i) In general.--The Secretary shall review the 
     designation of each foreign terrorist organization at least 
     once every four years in order to determine whether it should 
     be revoked pursuant to paragraph (6) . If such review does 
     not take place pursuant to subparagraph (4)(B) in response to 
     a petition for revocation that is filed during the petition 
     period, then it shall be conducted pursuant to procedures to 
     be developed by the Secretary, and neither the results of 
     such review nor the applicable procedures shall be reviewable 
     in any court.
       ``(ii) The Secretary shall publish the results of any 
     review conducted pursuant to this subparagraph in the Federal 
     Register.
       (4) in subparagraph 219(a)(6)(A), by deleting the words 
     ``or a redesignation made under paragraph (4)(B)'' and by 
     adding ``at any time, and shall revoke a designation upon 
     completion of a review conducted pursuant to subparagraphs 
     (4)(B) or (4)(C)'';
       (5) in subparagraph 219(a)(6)(A)(i), by deleting the words 
     ``or a redesignation'';
       (6) in subparagraph 219(a)(7), by deleting ``, or the 
     revocation of a redesignation under paragraph (6),'';
       (7) in subparagraph 219(a)(8), by deleting ``, or if a 
     redesignation under this subsection has become effective 
     under subsection (b)(4)(B),'' and by deleting ``or 
     redesignation.'';
       (b) Aliases.--By inserting a new subsection (b) as follows 
     and relettering the following subsections accordingly:
       ``(b) Amendments to a Designation.
       ``(1) In general.--The Secretary is authorized to amend a 
     designation under the provisions of this subsection if the 
     Secretary finds that the organization has changed its name, 
     adopted a new alias, dissolved and then reconstituted itself 
     under a different name or names, or merged-with another 
     organization.
       ``(2) Procedure.--Such amendments shall be effective upon 
     publication in the Federal Register and the provisions of 
     subparagraphs (a)(2)(B) and (a)(2)(C) shall apply. The 
     procedures and rules set forth in paragraphs (a)(4), (5), 
     (6), (7), and (8) shall also apply to amended designations.
       ``(3) Any such amendment shall be reported to the 
     appropriate Congressional committees within 30 days of 
     publication pursuant to subparagraph (a)(2)(A)(i).
       ``(4) The administrative record may be amended to include 
     such new or additional names and any additional relevant 
     information to support the amendment.
       ``(5) The Secretary may consider classified information in 
     making an amendment under this subsection. Classified 
     information shall not be subject to disclosure for such time 
     as it remains classified, except that such information may be 
     disclosed to a court ex parte and in camera for purposes of 
     judicial review under subsection (c).''; and
       (c) Technical Amendments.--
       (i) In subparagraph 219(a)(3)(B), by changing ``subsection 
     (b)'' to ``subsection (c)''.
       (ii) In subsection 219(c)(1), as amended by this section, 
     by striking the phrase after ``publication'' and before ``in 
     the United States Court of Appeals'' and inserting ``in the 
     Federal Register of a designation, an amended designation, or 
     a determination in response to a petition for revocation, the 
     designated organization may seek judicial review in the 
     United States'' in lieu thereof.
       (iii) In subsection 219(c)(2), (3), and (4), as amended by 
     this section, by adding ``, amendment, or determination'' 
     after ``designation'' wherever it occurs.
       (d) Savings Provision.--The term ``designation'' includes 
     all previous redesignations made pursuant to subparagraph 
     219(a)(4) prior to the effective date of this Act, and such 
     redesignations shall continue to be effective until revoked 
     as provided in paragraphs (a)(5) or (a)(6).

                     TITLE VI--SECURITY ASSISTANCE

     SEC. 601. RESTRICTIONS ON ECONOMIC SUPPORT FUNDS FOR LEBANON.

       Section 1224 of the Foreign Relations Authorization Act, 
     Fiscal Year 2003'' is amended by inserting after ``lapses.'': 
     ``c. Exception.--Subsection (a) shall not apply to such 
     assistance otherwise subject to the restriction set forth 
     therein that is made available to address the water needs of 
     Southern Lebanon.''

     SEC. 602. THRESHOLDS FOR CONGRESSIONAL NOTIFICATION OF FMS 
                   AND COMMERCIAL ARMS TRANSFERS.

       The Arms Export Control Act is amended--
       (a) in section 36(b)--
       (1) in paragraph (1)--
       (A) by striking ``Subject to paragraph 6, in'', and 
     inserting in lieu thereof ``(1) In'';
       (B) by striking ``$14,000,000'' and inserting in lieu 
     thereof ``$100,000,000'';
       (C) by striking ``$50,000,000'' and inserting in lieu 
     thereof ``$200,000,000''; and
       (D) by striking ``$200,000,000'' and inserting in lieu 
     thereof ``$500,000,000''; and
       (E) by inserting ``and in any case in which the President 
     concludes doing so would be appropriate,'' before ``before 
     such letter of offer is issued'';
       (2) in paragraph (5)(C)--
       (A) by striking ``Subject to paragraph (6), if'' and 
     inserting in lieu thereof ``If'';
       (B) by striking ``$14,000,000'' and inserting in lieu 
     thereof ``$100,000,000'';
       (C) by striking ``$50,000,000'' and inserting in lieu 
     thereof ``$200,000,000''; and
       (D) by striking ``$200,000,000'' and inserting in lieu 
     thereof ``$500,000,000'';
       (E) by inserting ``and in any case in which the President 
     concludes doing so would be appropriate,'' before ``then the 
     President shall submit''; and
       (3) by striking paragraph (6);
       (b) in section 36(c)--
       (1) in paragraph (1)
       (A) by striking ``Subject to paragraph (5), in'', and by 
     inserting in lieu thereof ``In'';
       (B) by striking ``$14,000,000'' and inserting in lieu 
     thereof ``$100,000,000'';
       (C) by striking ``$50,000,000'' and inserting in lieu 
     thereof ``$200,000,000'';
       (D) by inserting ``and in any case in which the President 
     concludes doing so would be appropriate,'' before ``before 
     issuing such license''; and,
       (2) in paragraph 2 by striking ``(A) and (B)'' and 
     inserting in lieu thereof ``(A), (B) and (C)'';
       (3) by striking paragraph (5);
       (c) in section 3(d)--
       (1) in paragraphs (1) and (3)(A) by striking ``Subject to 
     paragraph (5), the'' and inserting in lieu thereof ``The'';
       (2) in paragraphs (1) and (3)(A) by striking 
     ``$14,000,000'' and inserting in lieu thereof 
     ``$100,000,000''; and,
       (3) in paragraphs (1) and (3)(A) by striking 
     ``$50,000,000'' and inserting in lieu thereof 
     ``$200,000,000''; and
       (4) by striking paragraph (5).

     SEC. 603. BILATERAL AGREEMENT REQUIREMENTS RELATING TO 
                   LICENSING OF DEFENSE EXPORTS.

       The Arms Export Control Act is amended in section 38(j) as 
     follows
       (a) by adding a new paragraph (5):
       ``(5) Waiver.--Any of the requirements for a bilateral 
     agreement set forth in paragraph (2) may be waived if the 
     President determines that to do so is important to the 
     national interests, in particular the foreign policy, of the 
     United States, and, prior to exercising this authority, 
     provides notification to the appropriate congressional 
     committees of his intent to exercise this authority, the 
     justification for, and the extent of the exercise of this 
     authority. The certification requirement of paragraph 3(A) 
     may be met where the President has exercised this 
     authority.''

[[Page 8397]]

       (b) by adding a new paragraph (4)(C):
       ``(C) United states origin defense items.--The term `United 
     States origin defense items' means those defense items that 
     would be exempt from United States defense export licensing 
     requirements under an anticipated country exemption extended 
     in accordance with the authority of this subsection.''

     SEC. 604. AUTHORIZATION OF APPROPRIATIONS.

       (a) Grants Under Arms Export Control Act.--There is 
     authorized to be appropriated to the President for grant 
     assistance under section 23 of the Arms Export Control Act 
     (22 U.S.C. 2763) and for the subsidy cost, as defined in 
     section 502(5) of the Federal Credit Reform Act of 1990, of 
     direct loans under such section $4,414,000,000 for fiscal 
     year 2004 and such sums as may be necessary for FY 2005.
       (b) International Military Education and Training.--There 
     is authorized to be appropriated to the President $91,700,000 
     for fiscal year 2004 and such sums as may be necessary for 
     fiscal year 2005 to carry out chapter 5 of part II of the 
     Foreign Assistance Act of 1961, as amended (22 U.S.C. 2347, 
     et seq.).
       (c) Nonproliferation, Anti-Terrorism, Demining, and Related 
     Programs.--There is authorized to be appropriated under 
     ``Nonproliferation, Anti-Terrorism, Demining, and Related 
     Programs'' $385,200,000 for fiscal year 2004 and such sums as 
     may be necessary for fiscal year 2005.

     SEC. 605. COOPERATIVE THREAT REDUCTION PERMANENT WAIVER.

       (a) Authority To Waive Restrictions and Eligibility 
     Requirements.--if the President submits the certification and 
     report described in subsection (b) with respect to an 
     independent state of the former Soviet Union for a fiscal 
     year--
       (1) the restrictions in subsection (d) of section 1203 of 
     the Cooperative Threat Reduction Act of 1993 (22 U.S.C. 5952) 
     shall cease to apply, and funds may be obligated and expended 
     under that section for assistance, to that state during that 
     fiscal year; and
       (2) funds may be obligated and expended during that fiscal 
     year under section 502 of the FREEDOM Support Act (22 U.S.C. 
     5852) for assistance or other programs and activities for 
     that state even if that state has not met one or more of the 
     requirements for eligibility under paragraphs (1) through (4) 
     of that section.
       (b) Certification and Report.--
       (1) The certification and report referred to in subsection 
     (a) are a written certification submitted by the President to 
     Congress that the waiver of the restrictions and requirements 
     described in paragraphs (1) and (2) of that subsection during 
     such fiscal year is important to the national security 
     interests of the United States, together with a report 
     containing the following:
       (A) A description of the activity or activities that 
     prevent the President from certifying that the state is 
     committed to the matters set forth in the provisions of law 
     specified in paragraphs (1) and (2) of subsection (a) in such 
     fiscal year.
       (B) An explanation of why the waiver is important to the 
     national security interests of the United States.
       (C) A description of the strategy, plan, or policy of the 
     President for promoting the commitment of the state to, and 
     compliance by the state with, such matters, notwithstanding 
     the waiver.
       (2) The matter included in the report under paragraph (1) 
     shall be submitted in unclassified form, but may include a 
     classified annex.

     SEC. 606. CONGRESSIONAL NOTIFICATION FOR COMPREHENSIVE 
                   DEFENSE EXPORT AUTHORIZATIONS.

       Section 36(d)(1) of the Arms Export Control Act (P.L. 90-
     629) is amended to add the following new sentences at the end 
     after ``subsection.'':
       ``Notwithstanding section 27(g) of this Act, the provisions 
     of this subsection shall also apply in the case of an 
     approval under section 38 of this Act of a comprehensive 
     export authorization provided for in section 126.14 of the 
     International Traffic in Arms Regulations where the estimated 
     total value of the transfers anticipated at the time of 
     application meets the value thresholds of subsection (c)(1). 
     The provisions shall also apply to amendments to such 
     comprehensive authorizations that involve the addition to the 
     authorization of a new country entering into a related 
     cooperative agreement with the United States Government or 
     memorandum of understanding with the Department of Defense to 
     participate in cooperative activities referred to in such 
     authorizations.''

     SEC. 607. EXPANSION OF AUTHORITIES FOR LOAN OF MATERIAL, 
                   SUPPLIES, AND EQUIPMENT FOR RESEARCH AND 
                   DEVELOPMENT PURPOSES.

       Section 65 of the Arms Export Control Act (22 U.S.C. 2796d) 
     is amended--
       (a) in paragraph (1) of subsection (a)--
       (1) by striking ``Except as provided in subsection (c), the 
     Secretary of Defense, with the concurrence of the Secretary 
     of State, may loan to a country that is a NATO or major non-
     NATO ally'' and inserting ``Except as provided in subsection 
     (c), the Secretary of Defense may loan to--
       ``(i) a NATO organization or a country that is a NATO ally:
       ``(ii) a major non-NATO ally; or
       ``(iii) a friendly foreign country''; and
       (2) by striking ``The Secretary may accept as a loan or a 
     gift from a country that is a NATO or major non-NATO ally'' 
     and inserting ``The Secretary may accept as a loan or a gift 
     from--
       ``(i) a NATO organization or a country that is a NATO ally;
       ``(ii) a major non-NATO ally; or
       ``(iii) a friendly foreign country''; and
       (b) by amending subsection (d) to add after ``United 
     States)'' the following:
       ``and the term 'friendly foreign country' means any country 
     not a member of the North Atlantic Treaty Organization 
     designated as a friendly foreign country for purposes of 
     section 27(j)(2) of this Act''.

     SEC. 608. ESTABLISH DOLLAR THRESHOLD FOR CONGRESSIONAL 
                   NOTIFICATION OF EXCESS DEFENSE ARTICLES THAT 
                   ARE SIGNIFICANT MILITARY EQUIPMENT.

       Section 516(f)(1) of the Foreign Assistance Act of 1961, as 
     amended, (22 U.S.C. 2321j) is amended by striking the clause 
     ``excess defense articles that are significant military 
     equipment (as defined in section 47(9) of the Arms Export 
     Control Act) or''.

     SEC. 609. WAIVER OF NET PROCEEDS RESULTING FROM THE DISPOSAL 
                   OF U.S. DEFENSE ARTICLES PROVIDED TO A FOREIGN 
                   COUNTRY ON A GRANT BASIS.

       Section 505(f) of the Foreign Assistance Act of 1961, as 
     amended, (22 U.S.C. 2314(f)) is amended:
       (1) by striking in the second sentence ``In the case of 
     items which were delivered prior to 1985, the'' and inserting 
     in lieu thereof ``The''; and,
       (2) by adding after the second sentence the following:
       ``A waiver is not required for a country to retain such net 
     proceeds if the net proceeds are five per cent or less of the 
     original acquisition value of the items.''.

     SEC. 610. TRANSFER OF CERTAIN OBSOLETE OR SURPLUS DEFENSE 
                   ARTICLES IN THE WAR RESERVE STOCKPILES FOR 
                   ALLIES TO ISRAEL.

       (a) Authority.--(1) Notwithstanding Section 514 of the 
     Foreign Assistance Act of 1961, as amended, (22 U.S.C. 
     2321h), the President may transfer to Israel, in return for 
     concessions to be negotiated by the Secretary of Defense, any 
     or all of the items described in paragraph (2).
       (2) The items referred to in paragraph (1) are munitions 
     such as armor, artillery, automatic weapons ammunition, 
     missiles, and other munitions that--
       (A) are obsolete or surplus items;
       (B) are in the inventory of the Department of Defense;
       (C) are intended for use as reserve stocks for Israel; and
       (D) as of the date of enactment of this Act, are located in 
     a stockpile in Israel.
       (b) Concessions.--The value of concessions negotiated 
     pursuant to subsection (a) shall be at least equal to the 
     fair market value of the items transferred. The concessions 
     may include cash compensation, services, waiver of charges 
     otherwise payable by the United States, and other items of 
     value.
       (c) Advance Notification of Transfer.--Not less than 30 
     days before making a transfer under the authority of this 
     section, the President shall transmit to the Committee on 
     Foreign Relations and Armed Services Committee of the Senate 
     and the Committee on International Relations and the Armed 
     Services Committee of the House of Representatives a 
     notification of the proposed transfer. The notification shall 
     identify the items to be transferred and the concessions to 
     be received.
       (d) Expiration of Authority.--No transfer may be made under 
     the authority of this section five years after the date of 
     enactment of this Act.

     SEC. 611. ADDITIONS TO U.S. WAR RESERVE STOCKPILES FOR 
                   ALLIES.

       Section 514(b)(2) of the Foreign Assistance Act of 1961 as 
     amended, (22 U.S.C. 2321h(b)) is amended--
       (1) in subparagraph (A) by striking ``$50,000,000'' and 
     ``2001'', and inserting in lieu thereof ``$100,000,000'' and 
     ``2004'', respectively; and,
       (2) in subparagraph (B) by striking $50,000,000'' and 
     ``Republic of Korea'' and inserting in lieu thereof 
     ``$100,000,000'' and ``Israel'', respectively.

     SEC. 612. PROVISION OF CATALOGING DATA AND SERVICES.

       Section 21(h)(2) of the Arms Export Control Act (22 U.S.C. 
     2761(h)(2)) is amended by striking ``or to any member 
     government of that Organization if that Organization or 
     member government'' and inserting ``, to any member of that 
     Organization, or to the government of any other country if 
     that Organization, member government, or other government''.

     SEC. 613. PROVISION TO EXERCISE WAIVERS WITH RESPECT TO 
                   PAKISTAN

       Public Law 107-57, an Act to Authorize the President to 
     Exercise Waivers of Foreign Assistance Restrictions with 
     Respect to Pakistan, is amended--
       (1) in section 1(a), by striking ``2002'', wherever 
     appearing (including in the caption), and inserting in lieu 
     thereof ``2004'';
       (2) in section 1(b), by striking ``2003'', wherever 
     appearing (including in the caption), and inserting in lieu 
     thereof ``2005'';
       (3) in section 2, by striking ``prior to January 1, 
     2001,'';

[[Page 8398]]

       (4) in section 3(2), by striking ``Foreign Operations, 
     Export Financing, and Related Programs Appropriations Acts, 
     2002, as is'' and inserting in lieu thereof ``annual foreign 
     operations, export financing, and related programs 
     appropriations Acts for fiscal years 2002, 2003, 2004, and 
     2005, as are''; and
       (5) in section 6, by striking ``2003'' and inserting in 
     lieu thereof ``2005''.

  TITLE VII--INTERNATIONAL PARENTAL CHILD ABDUCTION PREVENTION ACT OF 
                                  2003

       To amend the Immigration and Nationality Act to render 
     inadmissible to the United States certain relatives of 
     international child abductors, and for other purposes.

     SEC. 701. SHORT TITLE.

       This Act shall be cited as the ``International Parental 
     Child Abduction Prevention Act of 2003.''

     SEC. 702. INADMISSIBILITY OF ALIENS SUPPORTING INTERNATIONAL 
                   CHILD ABDUCTORS AND RELATIVES OF SUCH 
                   ABDUCTORS.

       (a) In General.--Section 212(a)(10)(C)(ii) of the 
     Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(C) 
     (ii)) is amended--
       (1) in subclause (I), by striking the comma at the end and 
     inserting in its place a semicolon;
       (2) in subclause (II), by striking the comma before ``or'' 
     at the end and inserting in its place a semicolon;
       (3) by amending subclause (III) to read as follows:
       ``(III) is a spouse (other than a spouse who is the parent 
     of the abducted child), son or daughter (other than the 
     abducted child), grandson or granddaughter (other than the 
     abducted child), parent, grandparent, sibling, cousin, uncle, 
     aunt, nephew, or niece of an alien described in clause (i), 
     or is a spouse of the abducted child described in clause (i), 
     if such person has been designated by the Secretary of State, 
     in the Secretary of State's sole and unreviewable 
     discretion,'';
       (4) by separating the final general clause from subclause 
     (III) as amended by subsection (a) (3) of this section; and
       (5) by amending the final general clause to read as 
     follows:
       ``is inadmissible until the child described in clause (i) 
     is surrendered to the person granted custody by the order 
     described in that clause, and such person and child are 
     permitted to return to the United States or such person's 
     place of residence, or until the abducted child is 21 years 
     of age.''
       (b) Authority To Cancel Certain Designations; 
     Identification of Aliens Supporting Abductors and Relatives 
     of Abductors; Entry of Abductors and Other Inadmissible 
     Aliens in Visa Lookout System; Definitions.--Section 
     212(a)(10)(C) of the Immigration and Nationality Act (8 
     U.S.C. 1182(a)(10)(C)) is amended by adding at the end the 
     following:
       ``(iv) Authority to cancel certain designations.--The 
     Secretary of State may, in his sole and unreviewable 
     discretion and at any time, cancel a designation made 
     pursuant to Section 212(a)(10)(C)(ii)(III) .
       ``(v) Identification of aliens supporting abductors and 
     relatives of abductors.--In all instances in which the 
     Secretary of State knows that an alien has committed an act 
     described in clause (i), the Secretary of State shall take 
     appropriate action to identify the individuals who are 
     potentially inadmissible under clause (ii).
       ``(vi) Entry of abductors and other inadmissible persons in 
     visa lookout system.--In all instances in which the Secretary 
     of State knows that an alien has committed an act described 
     in clause (i), the Secretary of State shall take appropriate 
     action to cause the entry into the visa lookout system of the 
     name or names of, and identifying information about, such 
     individual and of any persons identified pursuant to clause 
     (v) as potentially inadmissible under clause (ii).
       ``(vii) Definitions.--For purposes of this subparagraph--
       ``(I) the term `child' means a person under twenty-one 
     years of age regardless of marital status;'' and
       ``(II) the term `sibling' includes step-siblings and half-
     siblings.''
       (c) Annual Report.--The Secretary of State shall submit to 
     the Committee on International Relations and the Committee on 
     the Judiciary of the United States House of Representatives, 
     and the Committee on Foreign Relations and the Committee on 
     the Judiciary of the United States Senate, for the year 
     beginning on the first day of the first full month after the 
     date of enactment of this Act, and for each of the four 
     subsequent years, an annual report that describes the 
     operation of Section 212(a)(10)(C) of the Immigration and 
     Nationality Act, as amended by this Title, during the year to 
     which the report pertains. Each such annual report shall be 
     submitted not later than 60 days after the end of the 
     applicable reporting period. As part of the required 
     description of the Act's operation, and to the extent 
     corresponding data are reasonably available, each such annual 
     report shall specify,
       (1) the number of cases known to the Secretary of State, 
     disaggregated according to the nationality of the aliens 
     concerned, in which a visa was denied to an applicant on the 
     basis of the applicant's inadmissibility under Section 
     212(a)(10)(C) during the reporting period; and
       (2) the cumulative total number of cases known to the 
     Secretary of State, disaggregated according to the 
     nationality of the aliens concerned, in which a visa was 
     denied to an applicant on the basis of the applicant's 
     inadmissibility under Section 212(a)(10)(C) since the 
     beginning of the first reporting period; and
       (3) the number of cases known to the Secretary of State, 
     disaggregated according to the nationality of the aliens 
     concerned, in which an alien's name was placed in the visa 
     lookout system on the basis of the alien's inadmissibility or 
     potential inadmissibility under Section 212(a)(10)(C) during 
     the reporting period; and
       (4) the cumulative total number of names, disaggregated 
     according to the nationality of the aliens concerned, known 
     to the Secretary of State to appear in the visa lookout 
     system on the basis of the aliens' inadmissibility or 
     potential inadmissibility under Section 212(a)(10)(C) at the 
     end of the reporting period.

                  TITLE VIII--MISCELLANEOUS PROVISIONS

            Subtitle A--Streamlining Reporting Requirements

     SEC. 801. REPORTS ON BENCHMARKS FOR BOSNIA.

       Section 7(b)(2) of the 1998 Supplemental Appropriations and 
     Rescissions Act (Public Law 105-174, 112 Stat. 64) and 
     Section 1203 of the Strom Thurmond National Defense 
     Authorization Act for Fiscal Year 1999 (Public Law 105-261) 
     are repealed.

     SEC. 802. REPORT CONCERNING THE GERMAN FOUNDATION 
                   ``REMEMBRANCE, RESPONSIBILITY, AND THE 
                   FUTURE''.

       Section 704 of the Foreign Relations Authorization Act, 
     Fiscal Year 2003 (Public Law 107-228) is repealed.

     SEC. 803. REPORT ON PROGRESS IN CYPRUS.

       Section 620C(c) of the Foreign Assistance Act of 1961 
     (Public Law 87-195) is amended by:
       (a) striking in the second sentence ``within 60 days after 
     the date of enactment of this section and at the end of each 
     succeeding 60-day period''; and
       (b) inserting in its place ``on a semiannual basis''.

     SEC. 804. REPORTS ON ACTIVITIES IN COLOMBIA.

       Section 694 of the Foreign Relations Authorization Act, 
     Fiscal Year 2003 (Public Law 107-228) is repealed.

     SEC. 805. REPORT ON EXTRADITION OF NARCOTICS TRAFFICKERS.

       Section 3203 of the 2001 Military Construction 
     Appropriations Act (Public Law 106-246) is repealed.

     SEC. 806. REPORT ON TERRORIST ACTIVITY IN WHICH UNITED STATES 
                   CITIZENS WERE KILLED AND RELATED MATTERS.

       Section 805 of the Admiral James W. Nance and Meg Donovan 
     Foreign Relations Authorization Act, Fiscal Years 2000 and 
     2001 (22 U.S.C. 2656f note), as amended by section 216 of the 
     Foreign Relations Authorization Act, Fiscal Year 2003 (Public 
     Law 107-228), is repealed.

     SEC. 807. REPORT AND WAIVER REGARDING EMBASSY IN JERUSALEM.

       The Jerusalem Embassy Act of 1995 (Public Law 104-45) is 
     amended as follows:
       (a) in section 6, by:
       (1) striking ``SEMIANNUAL'' in the section heading;
       (2) and by striking ``every six months thereafter'' and 
     inserting in its place ``each year thereafter''; and
       (b) in section 7(a)(2) by striking ``for an additional six 
     month period'' and inserting in its place ``for an additional 
     one year period''.

     SEC. 808. REPORT ON PROGRESS TOWARD REGIONAL 
                   NONPROLIFERATION.

       Section 620F(c) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2376(c)) is repealed.

     SEC. 809. REPORT ON ANNUAL ESTIMATE AND JUSTIFICATION FOR 
                   SALES PROGRAM.

       Section 25 of the Arms Export Control Act (22 U.S.C. 2765) 
     is repealed.

     SEC. 810. ANNUAL FOREIGN MILITARY TRAINING REPORT.

       Section 656 of the Foreign Assistance Act of 1961 is 
     amended as follows:
       (a) in paragraph (a)--
       (1) by striking ``January 1'' and inserting in lieu thereof 
     ``March 1'',
       (2) after ``personnel'' by inserting ``, excluding training 
     provided through sales,''
       (3) after ``State'' by inserting ``, which was completed'',
       (4) by striking all that follows after ``previous fiscal 
     year'' before the period, and
       (5) by inserting the following new second sentence:
       ``This paragraph shall not apply with respect to any NATO 
     member, Australia, New Zealand or Japan unless the 
     Secretaries jointly determine, after consultation with 
     Congress, that inclusion of any such country in the report is 
     warranted.'', and
       (6) by striking (a) (2);
       (b) in paragraph (b)--
       (1) in subparagraph (1) after ``purpose for the activity,'' 
     by inserting ``and'' and after ``operation'' by striking all 
     that follows before the period,
       (2) in subparagraph (3) after ``activity'' the first time 
     it occurs by striking all that follows before the period;
       (c) in paragraph (c) after ``unclassified form'' by 
     striking all that follows before the period; and

[[Page 8399]]

       (d) in paragraph (d) by striking ``All unclassified 
     portions of the'' and inserting in lieu thereof ``The''.''

     SEC. 811. REPORT ON HUMAN RIGHTS VIOLATIONS BY IMET 
                   PARTICIPANTS

       (a) Section 549 of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2347(h)) is repealed.
       (b) Section 548 of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2347g) is amended by striking paragraphs (b) and (c) 
     in their entirety and inserting the following:
       ``(b) Information on Human Rights'' Abuses. Upon request of 
     the Secretary of State for information regarding foreign 
     personnel or military units, the Secretary of Defense shall 
     provide such information contained in the database to the 
     Secretary of State. If the Secretary of State determines that 
     a foreign person identified in the database maintained 
     pursuant to this section was involved in a violation of 
     internationally recognized human rights, the Secretary of 
     State shall so advise the Secretary of Defense, who shall in 
     turn ensure that the database is updated to contain such fact 
     and all relevant information.''

     SEC. 812. REPORT ON THE DEVELOPMENT OF THE EUROPEAN SECURITY 
                   AND DEFENSE IDENTITY (ESDI) WITHIN THE NATO 
                   ALLIANCE.

       Section 1223 of the Strom Thurmond National Defense 
     Authorization Act for Fiscal Year 1999 (Public Law 105-261; 
     112 Stat. 2075 and 2155, respectively) is repealed.

     SEC. 813. REPORT ON TRANSFERS OF MILITARY SENSITIVE 
                   TECHNOLOGY TO COUNTRIES AND ENTITIES OF 
                   CONCERN.

       The National Defense Authorization Act for Fiscal Year 2000 
     (Public Law 106-65; 113 Stat. 542, 697, 706, 748, 756, 779, 
     and 798, respectively) is amended in section 1402, by 
     striking subsection (b)(2).

                       Subtitle B--Other Matters

     SEC. 814. NUCLEAR REPROCESSING TRANSFER WAIVER

       Section 102(a)(2) of the Arms Export and Control Act 
     (Public Law 90-629) (22 U.S.C. 2799aa-1) is amended in the 
     first sentence by deleting the phrase ``in any fiscal year'' 
     and the phrase ``during that fiscal year''.

     SEC. 815. COMPLEX FOREIGN CONTINGENCIES.

       (a) Purposes.--The President should ensure that assistance 
     provided to address complex foreign crises is designed to 
     respond on an urgent, flexible basis, including at the 
     outset, to mitigate without regard to scale of the crisis, 
     but taking account of the gravity of the crises, political 
     crises threatening democratic institutions, food, 
     agricultural or health crises, fiscal or economic crises 
     affecting countries, regions or ethnic groups. The response 
     should be designed to best serve United States foreign policy 
     interests, including the restoration or maintenance of peace 
     and security.
       (b) Whenever the President determines it to be important to 
     the national interest he is authorized to furnish on such 
     terms and conditions as he may determine assistance under 
     this section for the purpose of responding to complex foreign 
     crises.
       (c) There is hereby established a United States Complex 
     Foreign Contingency Fund to carry out the purposes of this 
     section. There is authorized to be appropriated to the 
     President from time to time such amounts as may be necessary 
     for the fund to carry out the purposes of this section, which 
     may be made available notwithstanding any other provision of 
     law. Amounts appropriated hereunder shall remain available 
     until expended.

                           SECTIONAL ANALYSES

                TITLE I--AUTHORIZATION OF APPROPRIATIONS

     SEC. 101. ADMINISTRATION OF FOREIGN AFFAIRS.

       This section authorizes appropriations under the heading 
     ``Administration of Foreign Affairs'' for fiscal years 2004 
     and 2005. It includes funds for executive direction and 
     policy formulation, conduct of diplomatic relations with 
     foreign governments and international organizations, 
     effective implementation of consular programs and its border 
     security component, the acquisition and maintenance of office 
     space and living quarters for the United States missions 
     abroad, provision of security for those operations, and 
     information resource management.
       In particular, this section provides authorization of 
     appropriations for the necessary expenses of the Department 
     of State and the Foreign Service, not otherwise provided for, 
     including expenses authorized by the State Department Basic 
     Authorities Act. These expenses include an authorization for 
     worldwide security upgrades. This section also includes 
     authorization of appropriations for the conduct of U.S. 
     public diplomacy programs, capital investment, 
     representation, protection of foreign missions and officials, 
     emergencies in the diplomatic and consular service, 
     repatriation loans, and payment to the American Institute in 
     Taiwan. This section includes the funding for the final year 
     of the Department's Diplomatic Readiness Initiative aimed to 
     hire 1158 additional employees beyond attrition over a three-
     year period to fill our staffing gaps (particularly in 
     critical overseas positions), provide a ``personnel 
     complement'' to allow for training, and respond quickly to 
     crises and emerging policy priorities.

     SEC. 102. INTERNATIONAL ORGANIZATIONS AND CONFERENCES.

       This section authorizes appropriations for fiscal years 
     2004 and 2005 under the heading ``International Organizations 
     and Conferences.'' It authorizes the necessary funds for U.S. 
     contributions of its assessed share of the expenses of the 
     United Nations and other international organizations of which 
     the United States is a member. In addition, provision is made 
     for assessed contributions to international peacekeeping 
     activities under United Nations auspices.
       This section also authorizes such sums as may be necessary 
     for each of the fiscal years 2004 and 2005 to offset adverse 
     fluctuations in foreign currency exchange rates.

     SEC. 103. INTERNATIONAL COMMISSIONS.

       This section authorizes appropriations for fiscal years 
     2004 and 2005 under the heading ``International 
     Commissions.'' It authorizes funds necessary to enable the 
     United States to meet its obligations as a participant in 
     international commissions, including those dealing with 
     American boundaries and related matters with Canada and 
     Mexico, and international fisheries commissions.

     SEC. 104. MIGRATION AND REFUGEE ASSISTANCE.

       This section authorizes appropriations for fiscal years 
     2004 and 2005 under the heading ``Migration and Refugee 
     Assistance'' to enable the Secretary of State to provide 
     assistance and make contributions for migrants and refugees, 
     including contributions to international organizations such 
     as the United Nations High Commissioner for Refugees and the 
     International Committee for the Red Cross, through private 
     volunteer agencies, governments, and bilateral assistance, as 
     authorized by law.

     SEC. 105. CENTERS AND FOUNDATIONS.

       This section authorizes appropriations for fiscal years 
     2004 and 2005 for the East-West Center, the National 
     Endowment for Democracy, and the Asia Foundation.

        TITLE II--DEPARTMENT OF STATE AUTHORITIES AND ACTIVITIES

     SEC. 201. REIMBURSEMENT RATE FOR AIRLIFT SERVICES PROVIDED TO 
                   THE DEPARTMENT OF STATE.

       The Department of Defense provides a variety of airlift 
     support for official Secretary of State overseas travel on a 
     reimbursable basis. The airlift mission involves, for 
     example, transporting armored vehicles necessary to provide a 
     safe environment for the Secretary, when such vehicles are 
     not available in country. The Department of Defense has a 
     two-tiered rate structure for charging for such support. At 
     present the Department of State is paying the higher rate, 
     which is nearly twice as much as the lower. This section 
     would authorize the Department of State to pay the Department 
     of Defense for airlift services at the Department of Defense 
     rate.
       Legislation has already been enacted under which the CIA 
     receives the Department of Defense rate on missions, which 
     the Secretary of Defense has determined to be related to 
     national security objectives (10 U.S.C. 2642). The Secretary 
     of State's travel is similarly aimed at national security 
     objectives, and similar treatment is therefore warranted. 
     This section would therefore amend 10 U.S.C. 2642 to add the 
     Department of State.

     SEC. 202. GRANT AUTHORITY TO PROMOTE BIOTECHNOLOGY.

       The Department plays a critical role in U.S. Government 
     efforts to ensure that foreign governments consider 
     biotechnology and its applications in agriculture/food on the 
     basis of science. Currently, the Department does not have 
     grant authority for funds that the Bureau of Economic and 
     Business Affairs (EB) receives for biotechnology policy 
     programs and for the Business Financial Incentive Fund. 
     Unlike a contractual arrangement, where a contractor provides 
     a good or service to the governmental agency in return for 
     payment, the grant process allows the government and the 
     grantee to enter into a partnership to achieve a shared 
     objective that serves the public good. Grant and cooperative 
     agreement authority would enable the Department to use these 
     funds more effectively, permitting it to work more directly 
     with universities, non-governmental organizations, 
     international organizations, private voluntary organizations, 
     scientific groups, and private sector associations. It is 
     anticipated that grants and cooperative agreements, as well 
     as contracts, would be used to support public-private 
     partnerships, workshops, seminars, media events, speaker 
     programs, and publications. The Department will implement 
     this authority in compliance with applicable statutory and 
     regulatory guidelines governing grants and cooperative 
     agreements. This section provides for up to $500,000 in grant 
     authority each fiscal year.

     SEC. 203. IMMEDIATE RESPONSE FACILITIES.

       In recent years, the Department has experienced a need to 
     stand up a diplomatic facility on very short notice to 
     achieve urgent, high-visibility foreign policy objectives. 
     The most dramatic cases were the situations in Nairobi, 
     Kenya, and Dar Es Salaam, Tanzania, immediately after the 
     1998 bombings. A recent example is the immediate temporary 
     facilities in Kabul in the aftermath of the war. Other 
     circumstances demanding immediate action would include, for 
     example,

[[Page 8400]]

     destruction or incapacitation of a U.S. diplomatic facility 
     by a terrorist attack, a natural disaster, or a war or 
     insurrection to which the U.S. is not a party. To ensure that 
     the Department has the flexibility to respond rapidly in 
     emergency situations, this section would provide that not to 
     exceed $15,000,000 of the funds appropriated under the 
     heading ``Embassy Security, Construction, and Maintenance'' 
     may be reprogrammed to provide immediate response facilities 
     without having to provide advance congressional notification 
     pursuant to any other provision of law, including but not 
     limited to section 34(a) of the State Department Basic 
     Authorities Act of 1956 (22 U.S.C. 2706). In such instances 
     where advance notification would otherwise be required, the 
     Department is required to notify and provide an explanation 
     of the circumstances requiring the deployment of immediate 
     response facilities to the Committee on Appropriations and 
     the Committee on International Relations of the House of 
     Representatives and the Committee on Appropriations and the 
     Committee on Foreign Relations of the Senate as soon as 
     practicable, but not later than 3 days after the obligation 
     or expenditure of such funds. This post-notification 
     procedure is similar to the one provided for in Section 34(c) 
     of the Basic Authorities Act of 1956 for situations involving 
     substantial risk to human health or welfare.
       This authority will not be used to circumvent advance 
     notification where a facility is not an immediately-needed 
     response to an urgent situation. It will be used for existing 
     posts or facilities, but not to stand up a new post or commit 
     initial funds toward a long-term project, such as 
     construction of a New Embassy Compound. Thus, for example, 
     had this authority existed at the time of the war in 
     Afghanistan, it would have been appropriately used for the 
     Phase 1 immediate temporary facilities, but not for the Phase 
     2 embassy annex and reconstruction.

     SEC. 204. MINE ACTION PROGRAMS GRANT AUTHORITY.

       The Department, through its Office of Mine Action 
     Initiatives and Partnerships (PM/MAIP), is actively working 
     with non-governmental organizations, foundations, and 
     companies to raise awareness and resources for mine action. 
     In particular, the Department has developed over two dozen 
     public-private partnerships which promote mine clearance; 
     survivors assistance, education programs, and research and 
     development of promising technologies for finding and 
     destroying landmines. To maximize the effectiveness of these 
     public-private partnerships, it is important that the 
     Department have the ability to enter into grants and 
     cooperative agreements. Unlike a contractual arrangement, 
     where a contractor provides a good or service to the 
     governmental agency in return for payment, the grant process 
     allows the government and the grantee to enter into a 
     partnership to achieve a shared objective that serves the 
     public good. This section provides for up to $450,000 in 
     grant authority each fiscal year.
       By being able to provide grants and enter into cooperative 
     agreements with organizations participating in the public-
     private partnership program, the Department would be able to 
     provide support to such private sector projects as training 
     demining personnel and mine-detecting dogs; developing 
     training materials and mine risk education materials that 
     teach children and adults about how to recognize, report, and 
     avoid landmines; and research and development into new 
     technologies to increase the effectiveness and speed of 
     detecting and removing landmines. To the maximum extent 
     feasible, grants and cooperative agreements would be used to 
     support mine action activities of non-governmental 
     organizations. The Department will implement this authority 
     in compliance with all statutory and regulatory guidelines 
     governing grants and cooperative agreements.

     SEC. 205. THE U.S. DIPLOMACY CENTER.

       This section would provide necessary authorities for the 
     operation of the new U.S. Diplomacy Center at the Department 
     of State. As envisioned, this Center would be dedicated to 
     creating a better understanding of the history and practice 
     of United States diplomacy. The Center would organize and 
     sponsor educational and outreach programs, including 
     conferences, seminars, and educational materials. It would 
     also include a museum area, focusing on the history of U.S. 
     diplomacy in safeguarding U.S. security, searching for peace, 
     increasing prosperity, promoting U.S. values, and protecting 
     U.S. lives abroad. As is customary in connection with such 
     activities, the Center should include appropriate visitor 
     services such as a museum shop, and should be able to pay for 
     reasonable expenses in connection with conferences and 
     outreach activities, such as refreshments and travel of 
     participants. This legislation would provide clear statutory 
     authority in these areas. Authority is also provided to 
     retain fees to support the Center's activities. It would also 
     include authority to dispose and lend museum artifacts and 
     materials, similar to the authority already provided to the 
     Department of State for the Diplomatic Reception Areas on the 
     seventh and eighth floors of the Harry S Truman Building. 
     Consistent with the Code of Ethics for Museums of the 
     American Association of Museums, the legislation provides 
     that proceeds from disposition of museum holdings can only be 
     used for collection purposes. This section also provides 
     that, except as may be identified subject to reprogramming 
     procedures, the Bureau of Public Affairs may not expend more 
     than $950,000 in fiscal year 2004 and such sums as may. be 
     necessary in fiscal year 2005 for the U.S. Diplomacy Center.

     SEC. 206. PUBLIC AFFAIRS GRANT AUTHORITY.

       The Department is actively pursuing outreach programs 
     designed to educate the American public about foreign affairs 
     issues and the development and implementation of foreign 
     policy. In particular, the Bureau of Public Affairs is 
     working with a number of nonprofit organizations (such as 
     academic institutions of higher learning, organizations 
     representing associations of American educators, local 
     organizations or community groups, and broadcasting entities) 
     in order to reach different sectors of the domestic audience.
       In certain situations, a grant or cooperative agreement is 
     a more appropriate vehicle than a contractual agreement to 
     meet the Department's goals. Unlike a contractual 
     arrangement, where a contractor provides a good or service to 
     the governmental agency in return for payment, the grant 
     process allows the government and the grantee to enter into a 
     partnership to achieve a shared objective that serves a 
     public good. In this case, the shared purpose is to educate 
     the American public on foreign affairs matters in a factual 
     and fair manner.
       The Department would continue to use its existing contract 
     authority for many activities and would exercise authority to 
     enter into grants and cooperative agreements only in those 
     limited instances where appropriate. The Department will 
     implement this authority in compliance with applicable 
     statutory and regulatory guidelines governing grants and 
     cooperative agreements.

    TITLE III: ORGANIZATION AND PERSONNEL OF THE DEPARTMENT OF STATE

     SEC. 301. COST OF LIVING ALLOWANCES.

       The proposed changes to the education allowance in 5 U.S.C. 
     5924(4) would: (1) allow for educational travel to the United 
     States for children in kindergarten through 12th grade, when 
     schools at post are not adequate; (2) allow for educational 
     travel to a school outside the United States for children at 
     the secondary and college level; (3) provide for educational 
     travel at the graduate level for children who are still 
     dependents; (4) permit payment of fees required by overseas 
     schools for successful completion of a course or grade; and 
     (5) allow the option of storing a child's personal effects 
     near the school during their trip home, rather than 
     transporting it back and forth.
       Currently, when families are serving in a post without 
     adequate local school facilities, the law allows for 
     transportation of children in kindergarten through 12th grade 
     to the nearest place where there is adequate education. For 
     instance, if an employee is assigned to Guinea-Bissau, 
     transportation for his/her dependents is calculated based on 
     hub-points in Europe (London and Rome). This causes 
     significant financial hardships for families, who are often 
     serving in the most difficult overseas assignments, and whose 
     children are in school in the United States. By changing the 
     wording of the law to allow transportation back to the United 
     States, the transportation component will ensure that parents 
     can afford to send their children to the United States for an 
     American education.
       On the other hand, when a child has reached the secondary 
     or post-secondary level, aside from a limited exception, 
     current law allows payment for travel only to and from a 
     school in the United States. This amendment would permit 
     transportation to schools outside the United States as well. 
     It would also allow educational travel at the post-
     baccalaureate level, when a child is still a dependent but 
     has graduated from college. This would be consistent with 
     what is allowed for military member dependents.
       Overseas schools frequently require participation in 
     programs that would not fall into the category of expenses 
     considered ``ordinarily provided without charge in the United 
     States,'' as described in 5 U.S.C. 5924(4)(A). For example, 
     students may be required to participate in a cultural studies 
     program that may include mandatory field trips. The proposed 
     amendment would allow associated costs to be paid with the 
     education allowance.
       Finally, the proposed amendment would allow for local 
     storage of a child's effects in lieu of transporting them 
     back and forth during school closings for students in 
     kindergarten and elementary school as well as higher levels 
     of education, provided that payment for local storage would 
     not exceed the cost of transport. Section 319 of the FY 2003 
     Foreign Relations Authorization Act (P.L. 107-228) added this 
     option for educational travel under 5 U.S.C. 5924(4)(B), and 
     this amendment would extend the option to educational travel 
     under 5 U.S.C. 5924(4)(A).
       In addition, this section makes technical amendments 
     including Puerto Rico as part of the ``United States,'' 
     eliminating language referring to the Canal Zone, and 
     removing a reference to an irrelevant statute.

[[Page 8401]]



     SEC. 302. WAIVER OF ANNUITY LIMITATIONS ON RE-EMPLOYED 
                   FOREIGN SERVICE ANNUITANTS.

       Foreign Service annuitants hired on a full-time basis have 
     their annuities terminated. Those employed on a parttime, 
     intermittent or temporary basis face a cap on the total sum 
     of their salary and their retirement annuity. The ``dual 
     compensation restrictions'' on Foreign Service annuitants, 
     many of whom have unique experience and talents, hamper the 
     Department's ability to hire these individuals to meet 
     mission needs. This section amends the Foreign Service Act to 
     allow the Secretary of State and heads of other relevant 
     agencies to waive these restrictions for positions for which 
     there is exceptional difficulty in recruiting or retaining a 
     qualified employee.
       Section 824(g) of the Foreign Service Act was last amended 
     in 1988 to authorize the Secretary to waive the annuity 
     limitations on re-employed Foreign Service annuitants on a 
     case by case basis if the annuitant is reemployed on a 
     temporary basis due to an emergency involving a direct threat 
     to life or property or other unusual circumstances. This 
     amendment extended to the 10 Foreign Service a waiver 
     authority that had existed and currently exists for the Civil 
     Service.
       Subsection (a) again seeks to amend section 824(g) of the 
     Foreign Service Act, and again to extend a waiver authority 
     to the Foreign Service that already exists for the Civil 
     Service. It would provide the Secretary authority to waive 
     the annuity limitations for annuitants reemployed on a 
     temporary basis in positions for which it is exceptionally 
     difficult to recruit or retain qualified employees. This 
     authority, which we do not expect to be used very often, 
     would better enable the Department to recruit and retain. 
     highly qualified persons necessary, for example, to meet our 
     mission needs in the war on terrorism and in our public 
     diplomacy efforts.
       Subsection (b) indicates that effective October 1, 2005, 
     section 824(g) will revert to its current form.

     SEC. 303. FELLOWSHIP OF HOPE PROGRAM.

       This section clarifies the authority underlying a current 
     exchange program between the foreign affairs agencies of the 
     United States, the European Union, and its member states, 
     created to promote collaboration among its young leaders. 
     Under this very successful program, Foreign Service officers 
     are identified on an annual basis to serve one-year details 
     at the European Union in Brussels and designated European 
     foreign ministries. After the Foreign Service Officers 
     complete the details at the EU or in the foreign ministries, 
     they are assigned to a position in the U.S. embassy in the 
     relevant European capital. Conversely, the State Department 
     also will receive members of the diplomatic corps from the 
     European Union and designated foreign ministries. While the 
     present program is limited to EU members, it may be that this 
     program could be extended to other designated countries.
       This provision renders moot a potential legal concern under 
     the Emoluments Clause of the Constitution (Article 1, section 
     9, clause 8). The Emoluments Clause provides that no person 
     holding an office of profit or trust under the United States 
     may, without the consent of Congress, accept an emolument 
     from a foreign state. Under the Fellowship of Hope program, 
     diplomats from the Commission and designated foreign 
     countries accept an emolument from a foreign state through 
     the course of compensation by their own government. However, 
     these diplomats are also holding an office of profit or trust 
     in the U.S. government. Explicit Congressional authority for 
     the exchange program would obviate any issue regarding the 
     Emoluments Clause.
       The Secretary will be responsible for administering this 
     program consistent with the national security and the foreign 
     policy interests of the United States. In particular, it 
     should be noted that information security considerations have 
     been carefully considered in the implementation of this 
     exchange program. Moreover, the Secretary will consult with 
     the Department of Justice or the Central Intelligence Agency, 
     as appropriate, to meet these responsibilities.

     SEC. 304. CLAIMS FOR LOST PAY.

       This section clarifies the Department's authority to make 
     technical corrections or enter into settlements of claims or 
     grievances brought by its employees involving lost pay, 
     allowances, or differentials. These complaints may involve 
     simple technical ``glitches'' in the payment of salary or 
     benefits, for which the Department (like other agencies) 
     routinely retroactively corrects the payment or makes a 
     payment as appropriate. Administrative adjustments also may 
     be required in order, for example, that a member of the 
     Foreign Service is made whole in connection with a 
     retroactive promotion.
       In addition, the Department routinely settles non-Title VII 
     claims brought by Civil Service employees before the Merit 
     Systems Protection Board, or those brought by Foreign Service 
     employees before the Foreign Service Grievance Board. In 
     settling or compromising such claims, the normal authority 
     for the payment of back pay would be the Back Pay Act (5 
     U.S.C. 5596). However, as is the case with most settlements, 
     the Department does not usually make any admission as to 
     liability, and therefore does not make a finding of an 
     unwarranted or unjustified personnel action under the 
     provisions of the Back Pay Act. This section would make clear 
     that no such finding would be necessary in the event of a 
     settlement or compromise of a claim or grievance which 
     otherwise is in accordance with all provisions of the Back 
     Pay Act.
       The Department is seeking this provision as clarification 
     to resolve back pay claims consistent with the spirit of 
     conciliation that underlies settlements generally. This 
     provision is not meant to question the current ability of 
     agencies to settle claims without admitting fault.

     SEC. 305. SUSPENSION OR ENFORCED LEAVE.

       This amendment brings the Foreign Service into parity with 
     the Civil Service. Current statutes, in particular, 5 U.S.C. 
     7512 and 7513, permit an indefinite suspension or enforced 
     leave of an employee during an investigation into the 
     revocation of a security clearance, where a security 
     clearance has been suspended, where there is reasonable cause 
     to believe the employee has committed a crime for which a 
     sentence of imprisonment may be imposed, or for such other 
     cause as will promote the efficiency of the service. The due 
     process requirements in this amendment are the same as those 
     afforded Civil Service employees.
       ``Reasonable cause'' may include, but is not limited to, an 
     indictment or circumstances attendant to an arrest or 
     investigation conducted by the Department or criminal law 
     enforcement authorities. The Board is substantially 
     constrained in what it may review with respect to suspensions 
     and enforced leave authorized by this amendment. The Board 
     will not, for example, have the authority to review the 
     merits of any security clearance revocation investigation, 
     which triggers a suspension under this amendment. In 
     reviewing any suspension or enforced leave under this 
     amendment, it is the Department's expectation that the 
     considerable body of law interpreting 5 U.S.C. sections 7512 
     and 7513 will guide the Board. Decisions as to whether or not 
     to grant the employee back pay upon the resolution of the 
     underlying matter will be at the discretion of the 
     Department. Under no circumstance may the Board grant 
     prescriptive relief with respect to an indefinite suspension 
     or enforced leave.

     SEC. 306. HOME LEAVE.

       This section reduces the time period for eligibility for 
     home leave from 18 to 12 months. In addition, this amendment 
     provides that members may take authorized rest and 
     recuperation travel under section 4081(6) even if they take 
     accrued, unused home leave authorized by this amendment. This 
     would ensure that eligibility for R&R would not be affected 
     if someone took home leave while on other travel to the 
     United States.
       The effect of these two amendments will be to facilitate 
     members to take home leave during tours of duty (including at 
     R&R posts) rather than at the end of their tours of duty as 
     is the Department's current practice. The Department does not 
     plan, however, to change its current policies related to the 
     authorization of home leave travel, i.e., that members take 
     home leave normally at the end of a two-year tour or at the 
     midpoint of a four-year tour. This amendment simply provides 
     some flexibility.

     SEC. 307. OMBUDSMAN FOR THE DEPARTMENT OF STATE.

       In section 172 of the Foreign Relations Authorization Act, 
     FY 1988 and 1989 (P.L. 100-204), the Congress expressed its 
     objective that the contributions of Civil Service employees 
     to the Department of State would not be overlooked and would 
     be adequately protected. It therefore established an 
     Ombudsman for Civil Service Employees in the Office of the 
     Secretary. This section is intended to enhance the 
     responsibilities of the Ombudsman to better serve the 
     Department's mission.
       This provision further ensures that the Ombudsman would 
     continue to report directly to the Secretary, and will have 
     the ability to participate in meetings regarding management 
     of the Department in order to be able to protect the 
     interests of all Department employees.

     SEC. 308. REPEAL OF RECERTIFICATION REQUIREMENT FOR SENIOR 
                   FOREIGN SERVICE.

       This section repeals the provision in the Foreign Service 
     Act that requires the Secretary to establish a 
     recertification requirement for members of the Senior Foreign 
     Service (SFS) that is equivalent to the recertification 
     process for the Senior Executive Service (SES).
       In section 1321 of the Homeland Security Act of 2002 (P.L. 
     107-296), the Congress repealed the recertification 14 
     requirements for SES employees contained in title 5 of the 
     United States Code. The rationale was that these periodic 
     recertification requirements for the SES did not serve a 
     useful purpose. We believe the same rationale applies to the 
     SFS.

                 TITLE IV--INTERNATIONAL ORGANIZATIONS

     SEC. 401 RAISING THE CAP ON PEACEKEEPING CONTRIBUTIONS.

       This provision would set at 27.1% for calendar years 2004 
     and 2005 the cap on UN

[[Page 8402]]

     peacekeeping assessments. This would allow the United States 
     to pay its peacekeeping assessment in full in 2004 and 2005. 
     This provision will allow us to avoid accruing future 
     peacekeeping arrears.

                TITLE V--SUPPORTING THE WAR ON TERRORISM

     SEC. 501. DESIGNATION OF FOREIGN TERRORIST ORGANIZATIONS.

       Overview: This section amends section 219 of the 
     Immigration and Nationality Act (``INA'') (8 U.S.C. 1189), 
     authorizing the Secretary of State, in consultation with the 
     Attorney General and the Secretary of the Treasury (the 
     ``Secretary''), to designate foreign terrorist organizations 
     (``FTOs''), in order to improve the statutory designation 
     procedures. It eliminates the statute's redesignation 
     provision, requiring the Secretary instead to review FTO 
     designations regularly, and it adds a procedure for amending 
     designations.
       Amending the Redesignation Requirement: The Duration of 
     Designation provision removes the requirement for the 
     Secretary to redesignate FTOs every two years for 
     designations to remain in effect. It permits an FTO 
     designation to remain in effect until it is revoked by an Act 
     of Congress or by the Secretary or set aside by the United 
     States Court of Appeals for the District of Columbia Circuit.
       The Review of Designation upon Petition provision requires 
     the Secretary to review the designation of an FTO if a 
     designated organization petitions the Secretary for 
     revocation once two years have elapsed from the date of its 
     designation. It also requires such review if an organization 
     files another petition once two years have elapsed from the 
     date of its last petition. This provision requires the 
     Secretary to issue a determination on a petition for 
     revocation within 180 days. It also permits an organization 
     to petition for judicial review of the Secretary's 
     determination within 30 days after that determination is 
     published in the Federal Register.
       The Other Review of Designation provision requires the 
     Secretary to review the designation of each FTO at least once 
     every four years in order to determine whether it should be 
     revoked, even if the organization does not submit a petition 
     for revocation. Absent such a petition, this automatic review 
     would be completed according to procedures to be developed by 
     the Secretary, and there would be no judicial review. This 
     periodic review is intended as an 17 automatic check on the 
     continued vitality of a designation, even in the absence of a 
     petition for revocation by the designated organization.
       With 36 FTOs designated as of March 2003, and others on the 
     way to designation, the demands that the current statutory 
     requirement to redesignate organizations every two years 
     imposes on the interagency counterterrorism workforce are 
     great. Each redesignation requires an interagency review 
     process and preparation of an administrative record that can 
     take months. The time demands associated with proving 
     repeatedly that terrorist groups have retained their 
     character as terrorists significantly drain resources from 
     other pressing counterterrorism work, including the pursuit 
     of additional designations pursuant to section 219 of the 
     INA, section 212(a)(3)(B) of the INA (8 U.S.C. 1182) 
     (designation of terrorist organizations for immigration 
     purposes), and Executive Order 13224 (terrorist financing).
       The proposed changes would streamline the current 
     procedures and permit a more effective use of USG resources, 
     while ensuring that the Secretary would regularly review an 
     organization's designation to determine if it should be 
     revoked. The terrorist threat we face has increased greatly 
     since section 219 was enacted in 1996, and now more than 
     ever, the USG needs to marshal its counterterrorism resources 
     as efficiently as possible.
       Aliases: Section 219 does not contain any explicit 
     statutory authority or guidance for making additional alias 
     designations after an organization is designated as an FTO. 
     In designating FTOs, the Secretary of State routinely lists 
     the names of the designated entities together with their 
     aliases, a practice that has been upheld by the United States 
     Court of Appeals for the District of Columbia Circuit. 
     Recently, certain groups that have been designated as FTOs 
     have changed their names in an effort to evade asset freezing 
     and other consequences of designation. Some FTOs have 
     dissolved and reconstituted themselves under a different name 
     or names, or merged with other organizations, even while 
     retaining the capability and intent to engage in terrorist 
     activity or terrorism. The difficulty of identifying all of 
     an organization's aliases also can slow down the process of 
     designating an organization as an FTO, creating unnecessary 
     delays that weaken an otherwise powerful tool for combating 
     international terrorism.
       This section would enhance the effectiveness and efficiency 
     of the designation process by adding explicit, streamlined 
     procedures for adding new aliases to an underlying 
     designation. It would allow the Secretary, or the Secretary's 
     designee if the Secretary subsequently delegates that 
     authority, to amend the existing administrative record for an 
     organization's designation, rather than requiring the 
     Secretary to create an additional administrative record in 
     support of the amendment.
       This section would require the Secretary of State (or the 
     Secretary's designee if the Secretary delegates that 
     authority) to make amendments in consultation with the 
     Attorney General and the Secretary of the Treasury (or their 
     designees if they delegate that authority), ensuring that 
     amendments reflect the expertise of Justice and Treasury. 
     Because it is a criminal offence to provide material support 
     or resources to a designated FTO, and because of the asset 
     blocking consequences of FTO designation, it is important 
     that designations be made in consultation with Justice and 
     Treasury. An organization covered by any such amendment also 
     would have the ability to seek judicial review of the 
     amendment or submit a petition to the Secretary for 
     revocation of an amendment.

                     TITLE VI--SECURITY ASSISTANCE

     SEC. 601. RESTRICTIONS ON ECONOMIC SUPPORT FUNDS (ESF) FOR 
                   LEBANON.

       The annual restriction that $10M of the ESF designated for 
     Lebanon be withheld from central government until the 
     President certifies their armed forces effectively assert 
     authority over Lebanon's southern border accomplishes little 
     beyond reducing the amount of ESF available to that country. 
     Since none of our ESF assistance monies go directly to the 
     government, but rather to NGOs, this restriction serves 
     neither as a carrot nor a stick from the perspective of the 
     Lebanese government. Rather, this provision restricts our 
     ability to promote democracy and economic development 
     precisely when we have a strong interest in helping Lebanon 
     rebuild its institutions. We believe that using this money in 
     water projects in southern Lebanon will help defuse Lebanese-
     Israeli tensions and would directly support USG efforts to 
     assure careful management of scarce water resources. Amending 
     this section to allow this funding to be used for water 
     projects would provide more transparency to Lebanese water 
     management and thereby more comfort to Israel, than would be 
     done by keeping this funding in escrow.

     SEC. 602. THRESHOLDS FOR CONGRESSIONAL NOTIFICATION OF FMS 
                   AND COMMERCIAL ARMS TRANSFERS.

       This section reflects the need for meaningfully increasing 
     the congressional notification thresholds for arms sales and 
     exports beyond the relatively modest increases for NATO and 
     Japan, Australia and New Zealand enacted in section 1404 of 
     the FY 2003 Foreign Relations Authorization Act. These recent 
     increases will only minimally reduce the number of 
     congressional notifications required and will, therefore, 
     result in the continued notification of what are often rather 
     insignificant sales of defense articles or services, 
     particularly since the recent threshold increases apply to so 
     few countries.
       The proposed revision would in effect repeal the modest 
     increases enacted last year and substitute in their place new 
     notification thresholds for defense sales and exports 
     applicable to all countries as follows: $100,000,000 for 
     Major Defense Equipment; $200,000,000 for other defense 
     articles and services; and, $500,000,000 for design and 
     construction services, sold via Foreign Military Sales. The 
     Administration plans to enhance its process for consultation 
     on cases of lesser value that may nonetheless be sensitive in 
     order to ensure an opportunity for Congressional input and 
     oversight. In that regard, the Administration would be 
     prepared to an exchange of letters with the chairs and 
     ranking members of the SFRC and the HIRC, indicating that we 
     would notify cases of concern to the committees even though 
     they might be of a lesser value than the higher thresholds 
     proposed by in this amendment.

     SEC. 603. BILATERAL AGREEMENT REQUIREMENTS RELATING TO 
                   LICENSING OF DEFENSE EXPORTS.

       The Security Assistance Act of 2000 converted into a legal 
     requirement the policy which set as a prerequisite for a 
     foreign country qualifying for a country exemption from 
     defense export licensing that the country have entered into a 
     binding bilateral agreement committing it to apply specific 
     defense export controls comparable to those of the United 
     States. Fundamental differences between U.S. law and the 
     legal regimes of the two countries with which the U.S. 
     commenced negotiations in July 2000, Australia and the U.K., 
     have proven that the specific commitments required by the law 
     are in many instances too strict or specific, making it very 
     difficult, if not impossible, to conclude an agreement that 
     will satisfy all the Act's requirements.
       To overcome this undue constraint on the President's 
     otherwise extremely flexible authorities to control 
     commercial defense trade, it is imperative, at very least, 
     that appropriate legislative relief be provided. The 
     amendment would allow the President to waive any of the law's 
     specific requirements for the agreement. This would give the 
     Administration, in this case the State Department, latitude 
     to conclude the best agreements that are achievable, and that 
     represent in its judgment sufficient significant improvements 
     in a country's defense export regulatory regime so as to 
     justify extending an exemption from U.S. defense export 
     licensing requirements. A second proposed revision would 
     narrow the scope of the commitments required of a foreign 
     country, to

[[Page 8403]]

     comport more with reasonable expectations that a country 
     would be 21 required to apply its enhanced defense export 
     controls mainly to U.S. origin defense items that are exempt 
     from U.S. licensing, which are harder to keep track of, 
     versus those items in that country that are subject to U.S. 
     licenses.

     SEC. 604. AUTHORIZATION OF APPROPRIATIONS.

       Subsection (a) authorizes $4,414,000,000 for fiscal year 
     2004 and such sums as may be necessary for fiscal year 2005 
     for Foreign Military Financing (``FMF'').
       Subsection (b) authorizes $91,700,000 for fiscal year 2004 
     and such sums as may be necessary for Fiscal Year 2005 for 
     the International Military Education and Training (IMET) 
     program. This requested level of funding for 2004 is an 
     increase of $6,700,000 over the Congress' authorization of 
     appropriations for fiscal year 2003 and reflects the 
     Administration's strong support for the IMET program.
       Subsection (c) authorizes $385,200,000 for fiscal year 2004 
     and such sums as may be necessary for fiscal year 2005 for 
     ``Nonproliferation, Anti-Terrorism, Demining, and Related 
     Programs.''

     SEC. 605. COOPERATIVE THREAT REDUCTION PERMANENT WAIVER.

       This section provides a permanent annual waiver for the 
     restrictions contained in subsection (d) of 22 U.S.C. 5952 
     and the requirements of section 502 of the Freedom Support 
     Act (Public Law 102-511). Section 1306 of the National 
     Defense Authorization Act for FY 2003 (Public Law 107-314) 
     provided authorization for an annual waiver only for Fiscal 
     Years 2003 through 2005. This permanent annual waiver would 
     ensure continuity for program planning purposes.

     SEC. 606. CONGRESSIONAL NOTIFICATION FOR COMPREHENSIVE 
                   DEFENSE EXPORT AUTHORIZATION.

       This provision amends section 36(d) of the Arms Export 
     Control Act to require congressional defense export 
     notifications for comprehensive defense export 
     authorizations. Specifically, the existing procedures for 
     such notifications of commercial defense exports applicable 
     under section 36(c) shall now apply in the case of 
     comprehensive defense export authorizations set forth in 
     section 126.14 of the International Traffic in Arms 
     Regulations where the estimated total value of the transfers 
     anticipated at the time of application meets the value 
     thresholds of subsection (c) (1). The amendment addresses a 
     Congressional concern that the congressional notification 
     provided by the Administration for the Global Project 
     Authorization, a type of comprehensive defense export 
     authorization provided for in the above mentioned regulation, 
     may not have necessarily been viewed to be covered by section 
     36(c), despite the willingnesss to provide such notification. 
     This amendment will clarify that such notifications are to be 
     provided, pursuant to the statute.

     SEC. 607. EXPANSION OF AUTHORITIES FOR LOAN OF MATERIAL, 
                   SUPPLIES, AND EQUIPMENT FOR RESEARCH AND 
                   DEVELOPMENT PURPOSES.

       The amendment would expand the scope of the authority under 
     section 65 of the Arms Export Control Act to loan items for 
     cooperative research and development beyond the current NATO 
     and major non-NATO ally recipients to include ``friendly 
     foreign countries'' as that term is used in section 27(j)(2) 
     of the Act. It would permit the loan authority to be used in 
     a manner that corresponds to that for the countries with 
     which cooperative activities may be conducted under section 
     27.

     SEC. 608. ESTABLISH DOLLAR THRESHOLD FOR CONGRESSIONAL 
                   NOTIFICATION OF EXCESS DEFENSE ARTICLES THAT 
                   ARE SIGNIFICANT MILITARY EQUIPMENT.

       This proposal seeks to establish the same dollar limit for 
     advance notification to Congress for all excess defense 
     articles. Currently, Congress requires advance notification 
     of all transfers of excess defense articles that are 
     Significant Military Equipment (SME), whereas Congress only 
     receives advance notification for those transfers of other 
     excess defense articles valued at $7 million or more. SME are 
     articles for which special export controls are warranted 
     because of their capacity for substantial military utility of 
     capability. This proposal would apply the $7 million advance 
     notice threshold to transfers of all excess defense 23 
     articles, including SME. This would reduce the number of 
     congressional notifications sent annually to Congress.

     SEC. 609. WAIVER OF NET PROCEEDS RESULTING FROM DISPOSAL OF 
                   U.S. DEFENSE ARTICLES PROVIDED TO A FOREIGN 
                   COUNTRY ON A GRANT BASIS.

       This proposal allows the President to waive the requirement 
     that net proceeds resulting from the disposal of defense 
     articles provided to a foreign country on a grant basis be 
     paid to the United States. Existing law limits the waiver 
     authority to items delivered before 1985. This proposal 
     supports the goal of reducing the volume of defense articles 
     worldwide, and reduces the potential that Defense articles 
     inadvertently may fall into the hands of parties hostile to 
     the United States. This legislation would retain the 
     requirement that the net proceeds greater than 5 percent of 
     the original acquisition value needs to be paid to the United 
     States Government, absent a Presidential determination that a 
     waiver is in the national interest of the United States.

     SEC. 610. TRANSFER OF CERTAIN OBSOLETE OR SURPLUS DEFENSE 
                   ARTICLES IN THE WAR RESERVE STOCKPILES FOR 
                   ALLIES TO ISRAEL.

       This proposal provides the United States increased 
     authority to transfer obsolete or surplus defense items to 
     Israel, in exchange for concessions to be negotiated by the 
     Secretary of Defense. Section 514 of the Foreign Assistance 
     Act (FAA) of 1961 (22 U.S.C. 2321h) provides that defense 
     articles included in DoD War Reserve Stocks (WRS) be 
     transferred to foreign governments only through Foreign 
     Military Sales (where the foreign government buys the 
     articles) or through grant military assistance (where the 
     value of the article is counted against military assistance 
     appropriations provided for the recipient country). The DoD 
     maintains a WRS stockpile in Israel. This is a separate 
     stockpile of U.S.-owned munitions and equipment set aside, 
     reserved, or intended for use as war reserve stocks by the 
     U.S. and which may be transferred to the Government of Israel 
     in an emergency, subject to reimbursement. The DoD now seeks 
     authority from Congress to transfer to Israel certain of 
     these WRS stocks to Israel. In return for transferring these 
     stocks to Israel, the U.S. would negotiate equivalent value 
     concessions from the Government of Israel. This initiative is 
     not without precedent. During 1995-96 pursuant to section 509 
     of the FY94/FY95 Foreign Relations Authorization Act (P.L. 
     103-236), the U.S. Government provided $66.62M (fair market 
     value) of WRS equipment to the Republic of Korea (ROK) for 
     equivalent value concessions. This proposal would allow the 
     U.S. to receive fair market value consideration, relieve the 
     U.S. Government of storage and other stockpile maintenance 
     costs, and avoid millions in cost to demilitarize, destroy, 
     or retrograde munitions and equipment back to the U.S.

     SEC. 611. ADDITIONS TO U.S. WAR RESERVE STOCKPILES FOR 
                   ALLIES.

       This proposal would allow the United States to transfer 
     excess items to the DoD War Reserve Stock in Israel. Section 
     514(a) of the Foreign Assistance Act (FAA) of 1961, provides 
     for DoD War Reserve Stockpiles in a host country that remain 
     the property of the U.S. government. These stockpiles enable 
     equipment and supplies to be prepositioned in key parts of 
     the world to enhance U.S. and host country defense readiness. 
     DoD maintains a War Reserve Stockpile in Israel that directly 
     supports the U.S. European Command's strategy for the defense 
     of Israel. This proposal is necessary to allow the U.S. to 
     transfer excess items to the War Reserve Stockpile in Israel. 
     The transfer allows excess assets to remain under U.S. title 
     but shifts the costs for maintenance, storage, 
     transportation, and demilitarization of the excess munitions 
     to Israel. By agreement with Israel, the U.S. does not pay 
     for the storage, maintenance, transport, and warehousing of 
     assets designated as War Reserve Stockpile, although the 
     assets remain under U.S. title.

     SEC. 612. PROVISION OF CATALOGING DATA AND SERVICES.

       The United States provides cataloging data and services to 
     the North Atlantic Treaty Organization (NATO) and member 
     governments on a reciprocal basis. The United States also 
     provides such services to several non-NATO countries, such as 
     Australia and New Zealand, but on a reimbursable basis under 
     foreign military sales. There are instances when the 
     interests of the United States would best be served if such 
     data and services could be provided to a non-NATO country 
     under a reciprocal agreement. This section would authorize 25 
     the President to provide such services to non-NATO countries 
     on a reciprocal basis.
       For almost 50 years, the NATO Codification System, which is 
     based on United States standards for naming, describing and 
     numbering items of supply, has served as the cornerstone for 
     interoperability between the United States and its NATO 
     allies. Many non-NATO countries that participate in joint 
     exercises and deployments with the United States have adopted 
     the NATO Codification System. Facilitating the provision of 
     United States cataloging data for materials produced in the 
     United States has been and continues to be in the Nation's 
     strategic interest. This is especially true in light of 
     contingency operations that have and may be initiated in the 
     war on terrorism.

     SEC. 613. PROVISION TO EXERCISE WAIVERS WITH RESPECT TO 
                   PAKISTAN.

       This amending legislation would extend the authority 
     contained in P.L. 107-57 to make inapplicable for FY 2004 
     foreign assistance restrictions relating to coups with 
     respect to Pakistan and. would waive for FY 2005 any coup 
     restrictions applicable in that year so long as the President 
     exercised that authority prior to October 1, 2005, the 
     amended and extended date of expiration of this amendment. It 
     would also make inapplicable foreign assistance restrictions 
     relating to debt with respect to Pakistan through fiscal year 
     2005. With respect to missile sanctions, the amendment would 
     extend the authority of current law waiving the notification 
     period for a missile sanction waiver with respect to any 
     sanctions imposed on foreign persons in Pakistan. It would 
     also

[[Page 8404]]

     continue the reduced notification period for drawdowns and 
     transfer of excess defense articles.
       The coup waiver of section 508 of the Foreign Operations 
     Appropriations Act in Section 1 is most critical for 
     Pakistan. Section 1(b)(1), as amended, would legislatively 
     extend the authority to waive coup-related sanctions for 
     Pakistan for FY 2004 and FY 2005--the President has waived 
     the sanction for FY 2003 under the current authority. Five 
     (5) days advance notice to Congress required under P.L 107-57 
     is continued. Section 2, as amended, would waive the 
     requirement for a 45 day advance notification to Congress 
     prior to waiving the missile 26 sanctions imposed on Pakistan 
     pursuant to section 73 of the AECA with respect to any such 
     sanctions imposed on foreign persons in Pakistan (versus 
     waiving only with respect to those sanctions imposed prior to 
     January 1, 2001, which would have already expired in any 
     event). Section 3 exempts Pakistan from foreign assistance 
     prohibitions in section 512 of the Foreign Operations 
     Appropriations Act relating to loan defaults by foreign 
     nations and similar restrictions contained in the Foreign 
     Assistance Act through fiscal year 2005, the period through 
     which the exemptions or waiver authority with respect to the 
     coup sanctions would be extended by these amendments.

  TITLE VII--INTERNATIONAL PARENTAL CHILD ABDUCTION PREVENTION ACT OF 
                                  2003

       General: The International Parental Child Abduction 
     Prevention Act of 2003 would amend Section 212(a)(10)(C) of 
     the Immigration and Nationality Act (INA) and is proposed to 
     provide additional tools to deter international parental 
     child abduction and/or wrongful retention, and to create 
     incentives for the return of children abducted from or 
     wrongfully retained outside the United States by their 
     foreign national parent or others., This measure's efficacy 
     in particular cases of international child abduction will 
     necessarily depend in large part on the degree to which the 
     taking parent and/or their family members desire to travel to 
     the United States and apply for a visa. Unlike legislation 
     proposed last year in the Government Reform Committee, this 
     measure would not adversely affect the lives or travel of 
     innocent adult American citizens. This legislation also 
     seeks. to avoid certain counterproductive definitional 
     difficulties from which the earlier proposals suffered, while 
     achieving many of the same results intended.
       Section 702(a)(3). This provision would expand the range of 
     persons who could be designated inadmissible by the Secretary 
     of State in international child abduction and wrongful 
     retention cases, even though those individuals were not 
     culpable in the abduction or wrongful retention. This would 
     be accomplished by amending existing subclause (III) of INA 
     212(a)(10)(C)(ii) to include a wider range of persons who 
     could be designated inadmissible based on their familial 
     connections to an abducting alien.
       Sections 702(a)(4) and (5). This language specifies the 
     circumstances under which inadmissibility based on any one of 
     subclauses I, II, or III of INA 212(a)(10)(C)(ii) will 
     terminate. It also makes a purely technical amendment to 
     clarify that the concluding clause of (C)(ii) is the 
     operative provision for subclauses (C)(ii)(I), (II), and 
     (III). As originally enacted, the concluding clause is 
     erroneously printed as if it were part of subclause (III), 
     when it in fact clearly applies to each of subclauses (I)-
     (III). Finally, the concluding clause is amended to provide 
     that inadmissibility based on (C)(ii) would terminate with 
     the return of the abducted child or the child's attainment of 
     age 21.
       Section 702(b). This would create new subsections (iv)-
     (vii). Subsection (iv) would (1) make explicit the Secretary 
     of State's authority to cancel designations of 
     inadmissibility applicable to relatives of abductors, and (2) 
     make clear that inadmissibility pursuant to subclauses (I) 
     and (II) (which is not discretionary) will expire only on 
     occurrence of the events specified in INA 212(a)(10)(C)(ii) 
     (the return of the abducted child or the child reaching age 
     21). These amendments will maximize the leverage available to 
     the Department when inadmissibility is used to encourage 
     relatives to place pressure on abductors for the return of 
     abducted children.
       New subsection (v) would require the Department of State to 
     identify the persons potentially inadmissible under clause 
     (ii) of INA 212(a)(10)(C) .
       New subsection (vi) would require the Department to enter 
     the names of persons inadmissible or potentially inadmissible 
     for a visa under subsections (i) or (ii) of INA 212(a)(10)(C) 
     into the visa lookout system. Together these requirements 
     would codify what the Department does through its intake 
     procedures to ensure that individuals who may be inadmissible 
     under the provisions of subsections (C)(i) and (ii) are 
     identified and that their names are entered into the visa 
     lookout system.
       New subsection (vii) defines ``child'' in a way that is not 
     inconsistent with the word's meaning throughout the INA while 
     taking account of concerns about abducted or wrongfully 
     retained children who marry at very young ages, often against 
     their will. The definition proposed seeks to avoid the 
     unintended consequences of potential alternatives. For 
     example, H.R. 5715, introduced last session, would have 
     effectively created a class of permanent children for 
     purposes of the visa ineligibility laws, frustrating the 
     Department's efforts to promote reconciliation and contact 
     within what are often multinational families. The effect of 
     the definition proposed in H.R. 5715 would have been to 
     compromise the rights normally accorded adult U.S. citizens 
     to travel while doing little to promote the return of 
     abducted or wrongfully removed children. This subsection also 
     changes the definition of ``sibling'' to include step- and 
     half-siblings.
       Section 702(c). Finally, this Title includes a requirement 
     that the Department of State report to Congress annually for 
     five years with a description of the operation of 
     212(a)(10)(C), including data on the number of visas denied 
     and names entered into the visa lookout system on the basis 
     of the statute. The report will provide Congress with 
     information useful to its ongoing communication with the 
     Department about the effectiveness of efforts to deter 
     international parental child abductions and to promote the 
     return of abducted and wrongfully retained American children 
     to the United States.

                  TITLE VIII--MISCELLANEOUS PROVISIONS

            Subtitle A--Streamlining Reporting Requirements

     SEC. 801. REPORTS ON BENCHMARKS FOR BOSNIA.

       This section would eliminate reporting requirements on 
     progress toward achieving the benchmarks for a sustainable 
     peace process in Bosnia that must be done as long as U.S. 
     ground combat forces continue to participate in the SFOR. 
     Significant reductions in U.S. and allied troops have 
     continued regularly since 1998. Regular briefings to 
     congressional staff (and Members, as desired) are sufficient 
     to address continuing concerns. This is a very timeconsuming 
     report for the Departments of State and Defense.

     SEC. 802. REPORT CONCERNING THE GERMAN FOUNDATION 
                   ``REMEMBRANCE, RESPONSBILITY, AND THE FUTURE.''

       This section would repeal this semi-annual report required 
     by section 704 of the FY 2003 Foreign Relations Authorization 
     Act. The State Department, in particular the office of the 
     Special Envoy on Holocaust Issues, offers regular formal and 
     informal briefings to Members and staff on this issue. This 
     report duplicates the information conveyed at these 
     briefings. Moreover, we have no authority to require the 
     ``Eagleburger Commission'' (the International Commission on 
     Holocaust Era Insurance Claims, or ICHEIC) or the Conference 
     on Jewish Material Claims against Germany to supply the data 
     needed for this report.

     SEC. 803. REPORT ON PROGRESS IN CYPRUS.

       This report is currently due every two months. This section 
     would change it to a semi-annual requirement. The 
     Administration is in regular contact with Congress on the 
     Cyprus situation. Generally, the situation does not change 
     rapidly in two months. If it did, the Administration would 
     brief Congress immediately.

     SEC. 804. REPORTS ON ACTIVITIES IN COLOMBIA.

       This section repeals the two reports required by section 
     694 of the FY 2003 Authorization Act (P.L. 107-228).
       Section 694(a) requires the Secretary, not later than 180 
     days after the enactment of the Foreign Relations 
     Authorization Act, Fiscal Year 2003, and annually thereafter 
     to report to Congress on the status of activities funded or 
     authorized, in whole or in part, by the Department or the 
     Department of Defense in Colombia to promote alternative 
     development, recovery and resettlement of internally 
     displaced persons, judicial reform, the peace process, and 
     human rights. This report duplicates material from a number 
     of other reports on Colombia:
       USAID includes much of the information that Section 694(a) 
     requires in the Congressional Budget Justification it submits 
     annually. For each program area, USAID provides progress on 
     implementation.
       Although it does not specifically address U.S.-funded 
     activities, the Department's annual Country Reports on Human 
     Rights Practices contain detailed information concerning 
     human rights and internally displaced persons in Colombia.
       Although not specifically required to report on internally 
     displaced persons, judicial reform, the peace process, and 
     general human rights matters, a number of other reports 
     typically include information on these issues:
       Pursuant to section 564(c) of the FY 2003 Foreign 
     Operations, Export Financing, and Related Programs 
     Appropriations Act (P.L. 108-7), the Secretary is required to 
     submit two reports and certifications to Congress in 
     conjunction with the obligation of funds for the Colombian 
     Armed Forces describing actions taken by the Colombian Armed 
     Forces to meet the human rights conditions on the provision 
     of assistance in section 564(a).
       Pursuant to section 3204(e) of the Military Construction 
     Appropriations Act, 2001 (P.L. 106-246), the President is 
     required to report to Congress semiannually through Fiscal 
     Year 2005 on costs incurred by any department, agency, or 
     other entity of the executive branch during the two previous 
     quarters in support of Plan Colombia. Each of those reports 
     includes information on subobligations of funds by the 
     Department of State in support of Plan Colombia.

[[Page 8405]]

       Pursuant to section 3204(f) of P.L. 106-246, the President 
     provides a bimonthly, classified report to Congress on the 
     aggregate number, locations, activities, and lengths of 
     assignments for all U.S. military personnel and U.S. 
     individuals civilians retained as contractors involved in the 
     antinarcotics campaign in Colombia. These reports include 
     certain information on contract personnel who are 
     participating in U.S.-funded efforts to promote alternative 
     development, recovery and resettlement of internally 
     displaced persons, judicial reform, the peace process, or 
     human rights.
       Finally, it is burdensome and inefficient to require the 
     Department of State to report on activities of the Department 
     of Defense.
       Section 694(b) requires an annual report on the activities 
     of U.S. businesses that have entered into agreements in the 
     previous 12-month period with the Departments of State or 
     Defense to carry our counternarcotics activities in Colombia. 
     Information responding to some of the information sought in 
     this report is available in the classified report we submit 
     to the Congress bimonthly pursuant to section 3204(f) of P.L. 
     106-246. We also cannot easily track and report on DOD's 
     contract activities.
       We are also concerned that recurrent, public reporting of 
     the names of businesses under contract to the Department of 
     State to support counternarcotics activities is likely to 
     increase the security risks to these businesses and their 
     employees both in Colombia and the United States. The 
     Department finances contracts for counternarcotics support in 
     Colombia expressly because the Colombian National Police 
     cannot meet the need for all services. P.L. 106-246, as 
     amended by the FY 2002 Foreign Operations Act (P.L. 107-115), 
     already provides limitations on the numbers of U.S. contract 
     personnel permitted in Colombia in support of 
     counternarcotics programs. Moreover, the Department is making 
     every effort to minimize the number of U.S. citizen personnel 
     employed by its contractors. The U.S. Embassy in Colombia 
     continually assesses the potential for U.S. businesses to be 
     involved in hostilities, and the risks to personal safety of 
     their personnel. These risks vary widely from day to day and 
     week to week. A report at any given moment in time would not 
     have general applicability.

     SEC. 805. REPORT ON EXTRADITION OF NARCOTICS TRAFFICKERS.

       This section repeals Section 3203 of the 2001 Military 
     Construction Appropriations Act. This section requires the 
     Secretary of State to report biannually during the period 
     Plan Colombia resources are made available on extradition of 
     narcotics traffickers from any country receiving assistance 
     in support of Plan Colombia from the U.S. This reporting 
     requirement is burdensome and duplicative of other required 
     reports. For instance, section 696 of the FY 2003 Foreign 
     Relations Authorization Act requires the Secretary of State 
     to submit a report on extradition practice between the United 
     States and governments of all foreign countries with which 
     the United States has an extradition relationship that 
     contains numerous similar requirements. This section 696 
     report includes: an aggregate list, by country, of the number 
     of extradition requests made by the United States to that 
     country in 2002; the number of fugitives extradited by that 
     country to the United States in 2002; an aggregate list, by 
     country, of the number of extradition requests made by that 
     country to the United States in 2002 and the number of 
     fugitives extradited by the United States to that country in 
     2002; any other relevant information regarding difficulties 
     the United States has experienced in obtaining the 
     extradition of fugitives; and a summary of the Department's 
     efforts in 2002 to negotiate new or revised extradition 
     treaties and its agenda for such negotiations in 2003. 
     Additionally, the Department's annual International Narcotics 
     Control Strategy Report also contains certain information 
     about extradition from countries worldwide with which we have 
     extradition treaties in force. We would also be happy to 
     brief members of Congress or their staffs on any issues of 
     particular concern.

     SEC. 806. REPORT ON TERRORIST ACTIVITY IN WHICH UNITED STATES 
                   CIVILIANS WERE KILLED AND RELATED MATTERS.

       This section would eliminate this semi-annual report. The 
     information is already available elsewhere: the Americans 
     killed overseas in terrorist attacks are prominently listed 
     in the Introduction to the Department's annual Patterns of 
     Global Terrorism report to Congress, and the names are 
     available on the State Department's Rewards for Justice web-
     site. PLO activities are also covered in the semi-annual PLO 
     Compliance with Obligations Under the Oslo Accords Report. 
     Moreover, the names and details of Americans killed overseas 
     in terrorist attacks are well covered in the press. The 
     separate compilation and preparation of a report specifically 
     on American casualties diverts scarce manpower resources from 
     other activities to fight terrorism.

     SEC. 807. REPORT AND WAIVER REGARDING EMBASSY IN JERUSALEM.

       This section would make the waiver and accompanying report 
     an annual, rather than semi-annual, requirement. The 
     Jerusalem Embassy Act prohibits obligation of more than our 
     annual overseas building acquisition and maintenance 
     appropriation unless the Secretary reports to Congress that 
     we have opened an embassy in Jerusalem. This prohibition may 
     be waived for successive six-month periods on ``national 
     security interest'' grounds; each waiver must be accompanied 
     by a report detailing progress made during the preceding six 
     months on moving our embassy to Jerusalem. Although the 
     reports have not significantly varied from one another, they 
     still require a significant amount of work to draft and 
     clear.

     SEC. 808. REPORT ON PROGRESS TOWARD REGIONAL 
                   NONPROLIFERATION.

       This section repeals section 620F(c) of the Foreign 
     Assistance Act of 1961 which addresses efforts made by the 
     United States to achieve regional agreement on nuclear 
     nonproliferation in South Asia and a list of obstacles to 
     such an agreement. The report is duplicative, since South 
     Asia nonproliferation issues are covered extensively in other 
     classified and unclassified reports by State and the CIA. For 
     example, India and Pakistan are included in the major 
     nonproliferation report done annually pursuant to section 
     1308 of the FY 2003 Foreign Relations Authorization Act and 
     in the CIA's annual ``721 Report'' on proliferation 
     activities.

     SEC. 809. REPORT ON ANNUAL ESTIMATE AND JUSTIFICATION FOR 
                   SALES PROGRAM.

       Section 25(a) requires the President to submit a report to 
     the SFRC, HIRC, and the House and Senate Appropriations 
     Committees by February 1 of each year listing all FMS and 
     commercial sales of military hardware anticipated in the 
     coming year. Preparation of this report is extremely labor-
     intensive, as security assistance officers at U.S. embassies 
     around the world must begin compiling data in October. 
     Unfortunately, while this report grows in size and complexity 
     each year, its value and utility are increasingly 
     questionable. Since the report includes all possible U.S. 
     sales of military equipment (760 in 2002) and has a dollar 
     threshold for reporting sales that is half that required for 
     congressional notification of actual sales, it includes a 
     large number of potential sales that are too minor to have 
     genuine military significance, or, in fact, never 
     materialize. In recent years, less than 20% of the entries on 
     the report (58 pages long in 2002) result in actual sales 
     during the reporting year. It is also redundant as a 
     reporting channel. The congressional committees that receive 
     this report also receive similar data for FMS sales on a 
     quarterly basis from reports provided under DSCA under 
     section 36(a)(6) of the AECA which cover all projected FMS 
     sales through the end of the year. Furthermore, 
     prenotification consultations assure that congressional staff 
     are advised of potentially controversial transfers well in 
     advance of formal notification.

     SEC. 810. REPORT ON FOREIGN MILITARY TRAINING.

       This section seeks to bring the military training report 
     required by section 656 of the Foreign Assistance Act of 1961 
     into conformity with a very similar report required in the 
     annual Foreign Operations Appropriation Acts (FOAA) and to 
     eliminate those portions of the current section 656 
     requirement that make it necessary to classify major portions 
     of the report. We intend to seek a similar amendment to the 
     FOAA requirement.
       To bring the section 656 requirement into conformity with 
     that of the FOAA, this amendment ``excludes training provided 
     through sales'' from the reporting requirement and changes 
     the date upon which the report is due to the Congress from 
     January 31 to March 1.
       To eliminate the portions of the report that must be 
     classified due to foreign policy or force protection reasons, 
     this amendment would eliminate the requirement to report on 
     projected training (i.e., ``training proposed for the current 
     fiscal year''), training locations, the U.S. military units 
     providing the training, and training provided through sales. 
     With these changes, a completely unclassified report could be 
     produced that would be accessible to a wider public audience.

     SEC. 811. REPORT ON HUMAN RIGHTS VIOLATIONS BY IMET 
                   PARTICIPANTS.

       This section would repeal the report on human rights 
     required by section 549 of the Foreign Assistance Act of 1961 
     (added by section 1212 of the FY 2003 Foreign Relations 
     Authorization Act). This report requires the Secretary of 
     State to submit an annual report ``describing, to the extent 
     practicable, any involvement of any foreign military or 
     defense ministry civilian participant in . . . [the IMET 
     program] in a violation of internationally recognized human 
     rights.'' This provision sends the very dangerous signal that 
     the USG will be tracking anyone enrolled in IMET thereafter. 
     This will deter people from participating in IMET and, thus, 
     damage U.S. national security interests. Moreover, while the 
     Bureau of Democracy and Human Rights maintains data necessary 
     to prepare the annual Human Rights Report, data is not 
     systematically collected on individual human rights 
     violators. As a result, if the department were required to 
     report on human rights violators who attended IMET courses 
     prior to the enactment of the Leahy Laws, we would be forced 
     to rely on the records and memories of security assistance

[[Page 8406]]

     officers in U.S. embassies around the world which would 
     likely be of uneven quality.

     SEC. 812. REPORT ON DEVELOPMENT OF THE EUROPEAN SECURITY AND 
                   DEFENSE IDENTITY (ESDI) WITHIN THE NATO 
                   ALLIANCE.

       The provision in section 1223 (22 U.S.C. 1928 note) 
     requires the Secretary of Defense to provide Congress with 
     various reports on the development of the European Security 
     and Defense Identity (ESDI) within the NATO Alliance. The 
     ESDI would enable the Western European Union, with the 
     consent of the NATO Alliance, to assume the political control 
     and strategic direction of specified NATO assets and 
     capabilities. This report is obsolete and provides 
     information of limited utility. The requested information is 
     no longer relevant and does not reflect the shift in focus 
     between the European Union and NATO.

     SEC. 813. REPORT ON TRANSFERS OF MILITARY SENSITIVE 
                   TECHNOLOGY TO COUNTRIES AND ENTITIES OF 
                   CONCERN.

       The provision in section 1402(b)(2) (22 U.S.C. 2778) 
     requires the Secretary of Defense, in consultation with the 
     Joint Chiefs of Staff and the Director of Central 
     Intelligence, to provide Congress with an assessment of the 
     cumulative impact of licenses granted by the U.S. for exports 
     of technologies and technical information with potential 
     military applications during the preceding 5-calendar year 
     period on the military capabilities of such countries and 
     entities, and countermeasures that may be necessary to 
     overcome the use of such technologies and technical 
     information. This report is redundant with reports already 
     submitted to Congress by the Department of State, the 
     Department of Commerce, and the Central Intelligence Agency.

                       Subtitle B--Other Matters

     SEC. 814. NUCLEAR REPROCESSING TRANSFER WAIVER.

       This section would amend section 102(a) of the Arms Export 
     Control Act so as to permit Presidential waivers to be 
     granted once again on a one-time, rather than fiscal year, 
     basis. When the Nuclear Proliferation Prevention Act of 1994 
     (NPPA) folded section 670 of the Foreign Assistance Act (the 
     so-called ``Glenn Amendment'', dealing with nuclear 
     reprocessing transfers) into the Arms Export Control Act as a 
     new section 102(a), the NPPA modified the waiver authority 
     originally in section 670. This change eliminated the 
     President's ability to grant one-time waivers from sanctions 
     (cutoff of U.S. economic and military assistance) and 
     replaced it with a requirement that any waivers may only be 
     granted in the fiscal year to which they will apply. The 
     ramifications of this change only became clear after there 
     were real cases to deal with. Specifically, any country, 
     having once been determined by President to have violated 
     section 102(a), is placed in an enduring and unchangeable 
     state of annual jeopardy of a U.S. aid cutoff. This is the 
     case even where the activity that triggered the violation was 
     subsequently terminated, the countries involved are not 
     proliferation threats, and the U.S. is fully satisfied with 
     these countries' current nuclear nonproliferation policies 
     and practices. We do not believe that this was the intent of 
     Congress when it made the waiver provision change.
       The re-establishment of the authority for the President to 
     grant one-time waivers under section 102(a) would not 
     eliminate our nuclear nonproliferation leverage under this 
     section since the President has the authority to impose 
     sanctions should any resumed or new activities occur. More 
     importantly, the processing of annual waivers from section 
     102(a) sanctions for situations long since satisfactorily 
     resolved is not a constructive use of this and future 
     Presidents' time and has a continuing potential to be an 
     irritant to our relations with these countries. The President 
     has no authority to put this situation to rest once and for 
     all absent a change in the law to allow, once again, one-time 
     waivers for Glenn Amendment violations.

     SEC. 815. COMPLEX FOREIGN CONTINGENCIES.

       This section authorizes the President to provide assistance 
     to quickly and effectively respond to or prevent unforeseen 
     complex foreign crises. This authority will be used to 
     provide assistance for a range of foreign assistance 
     activities, including support for peace and humanitarian 
     intervention operations to prevent or to respond to foreign 
     territorial disputes, armed ethnic and civil conflicts that 
     pose threats to regional and international peace, and acts of 
     ethnic cleansing, mass killing or genocide. Use of this 
     authority will require a determination by the President that 
     a complex emergency exists and that it is in the national 
     interest to furnish assistance in response. These authorities 
     will not be used to fund assistance activities in response to 
     natural disasters because existing contingency funding is 
     available for that purpose. This section authorizes 
     appropriation of such sums as may be necessary.


                                          Department of State,

                                    Washington, DC, April 2, 2003.
     Hon. Richard G. Lugar,
     Chairman, Committee on Foreign Relations,
     U.S. Senate.
       Dear Mr. Chairman: I am pleased to transmit proposed 
     legislation to authorize appropriations for the Department of 
     State to carry out its authorities and responsibilities in 
     the conduct of foreign affairs for fiscal years 2004 and 
     2005.
       The attached FY 2004-2005 Foreign Relations Authorization 
     Bill also contains provisions related to Department of State 
     authorities and activities, organization and personnel, 
     international organizations, security assistance, child 
     abduction prevention, and other miscellaneous provisions.
       Key sections for the Department, in addition to the FY 
     2004-2005 authorization of appropriations, would raise the 
     peacekeeping assessment cap, provide for a permanent annual 
     CTR waiver, and provide for greater flexibility in our 
     administration of security assistance. Also included is an 
     emergency fund for complex foreign crises which may be 
     important to operations in Iraq.
       Title VII of the proposed legislation, the International 
     Parental Child Abduction Prevention Act of 2003, is designed 
     to deter international abductions and unlawful retentions and 
     pressure an abductor to return a child to the parent with 
     lawful custody. This could provide an important new lever in 
     addressing child abductions worldwide.
       The FY 2004 Budget contains the first step toward a capital 
     security cost sharing program that will ensure that all 
     agencies and departments pay a fair share of the cost of new, 
     secure diplomatic and consular facilities. The full program 
     implementation is now under development, and a legislative 
     proposal may be forwarded at a later date. Other provisions 
     may be submitted in the near future in a supplemental 
     package. The Office of Management and Budget advises that 
     there is no objection to the submission of this proposed 
     legislation to the Congress and that its enactment would be 
     in accord with the President's program.
       We look forward to working with the Committee on this 
     important legislation.
           Sincerely,

                                                Paul V. Kelly,

                                              Assistant Secretary,
     Legislative Affairs.

                          ____________________